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11 Crucial Rules in Day Trading that Must Not Be Violated

Day trading, as a short-term trading activity, requires a deep understanding of critical rules. The following are 11 day trading rules that should be strictly adhered to in order to keep the trading account safe and avoid significant losses.

1. Day Trading is Not an Investment:

Understand that day trading is not a form of investment but an activity to profit from price movements within a single day. Be wary of high volatility, and rely on thorough analysis and effective money management for success.
  1. 2. Avoid a Gambling Mindset:

  2. Do not view day trading as gambling. Trading requires careful planning and analysis. Use technical or fundamental indicators to support trading decisions.

  3. 3. Apply 5W and 1H:

  4. Plan each trade with the 5W and 1H strategy (What, Who, When, Where, Why, How). Determine the currency pair, broker, trading time, platform, trading rationale, and risk management approach.

  5. 4. Start by Observing the First 15 Minutes of the Market:

  6. Avoid analysis in the first 15 minutes of the trading session to steer clear of high volatility. Wait until the market establishes its direction before seeking trading opportunities.

  7. 5. End Each Trade with a Review:

  8. Create a trading journal to record each position. Conduct a review to identify mistakes and lessons from each trading session.

  9. 6. Use Stop Loss Wisely:

  10. Implement stop-loss orders wisely to protect the account from significant losses. Place the stop-loss below the support level for buy positions and above the resistance level for sell positions.

  11. 7. Utilize Limit Entry Orders:

  12. Experiment with alternative entry methods like limit entry orders and stop-entry orders to avoid closing positions too early before the trend ends.

  13. 8. Be Selective in Choosing Trades:

  14. Wisely select markets based on volatility and liquidity. Avoid entering trades without strong reasons.

  15. 9. Maintain Control, Avoid Overambition:

  16. Controlling emotions when the market is unfavorable is crucial. Avoid being overly ambitious and refrain from chasing the market.

  17. 10. When in Doubt, Reduce Trading Volume:

  18. Reduce trading volume when in doubt or after experiencing losses. Don't let emotions influence trading decisions.

  19. 11. Accept Losses Gracefully:

  20. Accept losses gracefully. Do not seek revenge or get trapped in negative emotions. Move on and focus on the next trade.

  21. Adhering to these rules in day trading can increase the chances of success and reduce unnecessary risks. Discipline and effective risk management are the keys to ensuring success in the world of day trading.


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