Tuesday, 17 March 2009

Day Trading Online Rule

Day Trading Rule #1: Never think of a trade as an investment.
When you are day trading / online trading don't decide to hold onto the stock for an investment. If your buying a trade and nothing is happening, the stock doesn't move in a few days, you should get out. Since nothing about the company has changed, don't hold onto the stock.
Day Trading Rule #2: Day trading means cutting your losses
If your day trade goes down you want to get out when it hits your stop - when the decline still amounts to a short period of time or a small dollar amount. Cut your losses quickly and get over them quickly, because the losses to come will be at lower levels and at a bigger cost. Follow your trading plan.
Day Trading Rule #3: You already have a losing trade; it's ok to take another
A loss is a loss whether it's realized or unrealized. It's better to acknowledge the loss and take another trade that makes sense.
Day Trading Rule #4: Don't expect to make money until you are out of the trade.
It's not a gain until you sell it and take the gain.
Day Trading Rule #5: Don't trade by using stock trading tips
Don't trade something because a friend told you or your overheard it on a train. Do your homework and pick a trade based on your research and indicators.
Day Trading Rule #6: Until you are out of a trade, it cannot be considered a profitable trade
The amount you have to pay in taxes is nothing compared to the amount you could lose if you don't lock in the gain on your trade.
Day Trading Rule #7: Minimize your losses
Keep tabs on potential problem stocks because one bad apple can ruin a portfolio.
Day Trading Rule #8: Just because you might have missed the last trade, don't hastily jump into the next trade
Acknowledge that you've missed out on the opportunity and to move on to the next opportunity.
Day Trading Rule #9: Don't trade by the newspaper.
They're under pressure to get the story out.
Day Trading Rule #10: Don't jump off the bridge, just because your friends did.
You are likely to lose a lot more money than you'll make. If you go long because a bunch of your friends did, or the news said so, does not mean you will make money in your trade.