ProtraderMike's 10 Rules Of Day Trading Explained

Rule Number 1:

Always wait for the setup: No Setup-No Trade.

Trading is a business and we do not trade just to trade or for fun. Commissions and fees add up so it is important to place high probability trades to achieve a high score rate. Example – Trading UVXY I wait for certain large stocks to sell off and the market to follow. I scale into UVXY building a position of 1000 shares at various prices.

Rule Number 2:

Never buy just once – scale in and out

Scaling into a trade is very important to create an average buy just above your last buy. In the above example – the market spiked and is now selling off – I entry buy 100sh UVXY 31.42 and 100sh 31.40 and 100sh 31.35 and 100sh 31.28 and 600sh 31.30 to have average 1000sh at 31.33 – now the stock rebounds up as market sells off and start scale out for profit at 31.42 where original buy was. Now at that point your up .11 on the trade instead of being even (which would have happened if you bought at just that one price 1000 sh)

Rule Number 3:

THE BEST trades work almost right away.

With the above example I look to exit the trade as I scale out at higher prices. I sell the first 200sh 31.45 than 200sh 31.55 and 200sh 31.65 and 200sh 31.75 and 100sh 31.85 and 100sh 31.95 (if possible)

Rule Number 4:

Never take a big loss. If it doesn't 'feel' right. Sell it!

Be patient with winning trades: Impatient with sketchy trades. – Listen to your inner person – when your profitable and you say to yourself the stock is going higher THAT IS YOUR SIGNAL TO SELL HALF THE POSITION. When you feel you are in a bad trade YOU ARE SO SELL IT AS $200 LOSS BETTER THAN $1000 LOSS.

Rule Number 5:

Always trade with the size that makes you unemotional.

If you trade with $100,000 trade $10,000 to $20,000 per trade with a 1% to 3% stop loss in place.

Rule Number 6:

DISCIPLINE to follow your plan is the key to winning in trading.

Stick to the Rules!

Rule Number 7:

Never get emotionally attached to trades.

Small losses are ok. If you trade with a score rate of 80% and you lose on 2 out of 10 trades – control the losses on the 2 and you will be a winning trader.

Rule Number 8:

Keeps things very simple and don't over-think your trading methods.

With so many stocks and charting tools it’s easy to get distracted. Keep focus on trading what you’re comfortable with and follow the rules.

Rule Number 9:

Always perfect your craft and sharpen your skills.

Keep a journal of your wins and losses this will help you become a better trader. Keep track of your equity balances and trading costs on a daily basis.

Rule Number 10:

Be confident in your trading mode and Stay humble at all times.

The market can hurt you as bad as it rewards you.