The extreme complexity of online charting packages and trading tools would have you believe that there has to be a lot of thought taking place in the trading business. The fact is that these tools are used for planning the trade and the whole trading plan, but when the trader places the order there is no more judgment on the markets. It is all down to your day trading rules.
The trader looks at the trading calendar, figures out volatility and the impact of news, then looks at important price levels to see if they are relevant for that day. He then makes up his mind as to whether he should buy dips or sell rallies, after that he will have a clear trading plan for the day.
Specific Day Trading Rules
Wait up to 25 minutes for the trade to prove itself - a lapse of 25 minutes is a kind of stop loss order.
Be out of the market during the first hour on unclear direction days.
Use the first hour high and low as well as yesterday's high and low for possible turning points today. If the trade goes well you should get out near these levels.
Count 30 minute bars, 3 large, consecutive up or down bars often make the first leg of one trend, it is considered as a very likely top or bottom and stops should be tightened.
Don't take trades during the mid session time zone, participation is lower and trends hardly ever develop.
The markets do adhere to these rules more often than not, exceptions to these rules are indeed the exception to the statistical rule and nothing more. These rules help develop an emotionless trading plan that can stay immune to minor price volatility and panic attacks that are reflected in the price.
There are trading mentors that provide premium, advanced training, much more detailed and sophisticated than the above rules. If however you can't afford such efficient, premium trading education, at least stick to the above rules and it will help you somewhat. Of course the premium educators do something unique, they help remove the emotions out of your trading, and that is something no book or articles can ever do!
It's like going to the doctor and getting advanced therapy, one that exactly fixes your health problem and you get your life back.
Emotionless trading with discipline and advanced homework techniques, but always kept separate, that's what day trading rules are all about!
Paul Murphy is a passionate and successful trader. Always in search of the best trading systems, and researching ways to help you be the best trader you can possibly be.
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