Daytime Dealing Techniques

Daytime Dealing Techniques

Daytime Dealing Techniques

Set up and entry

You need to establish a strategy that has a reasonable to high probability of success that is its Win/Loss and Risk/Reward ratios.

The exit

Acknowledge the risk on every trade and make sure it fits within the parameters of your overall financial plan. Never trade without a stop in the market uses a stop on every trade. Never place a trade until you know where to place the stop loss first and exactly at what price. If you place a trade then work out where the stop should go, you will start moving the stop. Successful day trading is manning your risk and understanding high probability set ups for the entries.

Money Management

What are your complete capital objectives?

What is the require capital to meet those objective?

Risk of total capital?

Percentage peril on each merchandise?

Position size?

maximum risk each day?

What is the win/loss ratio required to achieve your objectives?

What is the profit ratio required? (Risk divided into profit)

Understanding the numbers is half the solution in day trading and the amount of the spread and slippage ought to be brought into the equation. If you win 50% of your trades with the same amount of win loss, the spread, slippage and brokerage will impact on the account, you may find you need a win/loss of 55% and an average profit ratio of? Day trading is not investing, it is a company and you need high returns to be successful in a corporation. A day trader needs to work out the statistics before they trade. Fail to plan = plan to fail.

What would it take to make 100% on your capital in 4 months?

Is capital of $20,000 enough to be a day trader? Using less capital $10,000 would need a slightly higher percentage at risk, that is per day, per trade. If you are complementary four trades every day at 1.6% per trade, that's a daily hazard of 6.4% of total capital, $640 of your $10,000. What profit ratio and win loss ratio do you need? The numbers become very important in day trading, they need to be worked out before you trade, then you need to trade to them.

A strategy in mind

There are of course many trading strategies out there and I've always been in the mind of educating myself, but at the end of the day I found it most important to develop my own style with my own trading rules, if you develop your own, then you simply understand it at a much deeper level and you will act off them quicker.

The strategy below is a mechanical method that is fundamental to most day traders. It will give you a base to develop from but there is more experience and knowledge that needs to come together to improve upon this method, such as reading volume, understanding numbers, market influences and so on. Day trading one market for one year will give you a solid understanding of how to trade it. If this is the case then the first year of day trading is partly survival. Risk direction is used to protect capital so you can last long enough in the market to essentially learn and the longer you are in the market the more you will learn. Most great day traders have experienced all that can happen and they come back to the markets to conquer not only their own weaknesses but the market. They take money from the market consistently because they have a professional mind set.

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