Key rules of day trading
for beginners
Key points for best
stock day trading system
There are several day trading lessons of day trading for beginners. These lessons should be taken and understood before any real intra-day trading activities. When these key points are not understood or are used incorrectly then they often lead to day trading mistakes.
Any beginner who wants to trade intra-day must understand that trading is not a hobby. It must be done like a business and here
trading business plan
has to exist. Another important issue is to create suitable stock day trading system with one or more intra-day trading strategies. Why more ? The stock market is not always in the same situation every day. It is important for intraday traders to have separate intra-day trading rules for bullish day when stock markets are
in bullish mood.
and for day when there is bear stock market mood or days when stock market is trading is some range without any significant trend.
Gap day trading lessons
Another stock trading strategy should be prepared for day when stock markets are in bearish mode and indexes are in decline. And finally there are also days when stock markets open with a gap. Any introduction to day trading for beginners should point to that.Here are chart examples of few gaps that occurred on US stock market indexes.
These gaps could be used as trading opportunity. But there are intra-day traders that do not trade gaps and avoid to trade when gap happens. So these day trading lessons for gaps tell us that there is necessary to be prepared to use different intra-day trading strategy every day. Second important point is that is is also possible to avoid intra-day trading in any particular day. It is possible to stay away during a day that is not ideal for intra-day trading strategy that trader uses. Over-trading and pushing into trading when conditions are not optimal are big
day trading mistakes.
Next three day trading lessons
for stock day trading system
First key point for
stock day trading system and strategy
is to stick with simple methodology of
support and resistance
. These two values are most important technical analysis tools that should be used in intra-day trading of stocks or ETFs.Check this chart of support and resistance established on SPY - index ETF - during a trading day. Intra-day trader should be patient and wait for attempt to break up or break down of this range.
As this range is defined it can be easily used for setting of best entry point and stop loss level. Intra-day stock chart analysis also help to check possible targets for such trade. These three values provide calculation of risk reward that should be 2:1 as minimum for any stock day trading system. The
risk reward ratio
above 3:1 is much better. This is second key point.And there is third lesson of day trading for beginners. Be patient and wait for break of this important level. Then enter trade accordingly with trade setup you have already prepared. Set the trade size accordingly to your
money management
rules.
The breakdown of trading range can be seen on this intra-day chart above. The breakdown was accompanied with above average volume that is good sign for further trade development.And final chart presents situation after trade developed. It was possible to make quite nice gain in this SPY
short sell
daytrade. The arrow shows point of possible exit when
trailing stop loss technique
was used.
Return from Day trading for beginners back to Day trading
Return from Day trading for beginners back to simple-stock-trading.com homepage
|
