The Three Most Important DAYTRADING Rules

One of the keys to being truly a successful day trader is to have a summary of rules that you consistently follow. Unlike a normal job where you would have a boss overlooking your shoulder, as a day trader you’ll be your personal boss and thus be responsible for your own results. By recording and following your entire day trading rules, you’ll develop a system that reinforces your trading discipline and prevents you from making costly errors. On this page, I’ll share my three most significant day trading rules.

Rule #1: Manage Risk On Every Trade

This rule is really the foundation of my trading philosophy. It means that on every trade I make, my first consideration is not how much potential profit I could make, but how much money I could potentially lose. Way too many traders focus too much on the potential profit and forget the need for risk management. Before I make any trade, I understand what my downside is and the price at which I am going to exit the trade if it goes against me (my stop-loss). This means that no single losing trade will undoubtedly be catastrophic. As a trader, my goal is to hit consistent singles and doubles rather than necessarily home runs.

Rule #2: Limit Midday Trading

Another key to learning to be a consistently profitable day trader is to understand the importance of the time of day. Regarding trading opportunities, not all times are manufactured equal. Generally, there is a lot more volatility and volume in the stock market at the open and close of trading and a pronounced lull in trading activity during the middle of the day. Because day traders need volatility to make money and also must overcome their transaction costs, trading in the center of the day is frequently a negative idea. To enforce this rule, I keep my eye on the clock and drastically reduce my position sizes and risk in the center of your day (generally from 10:00 am -2:00 pm CST).

Rule #3: Review Every Trade I Make

I view every trade I make as a learning experience, both for more information about the strategies and techniques I’m using in addition to to gain information about the existing market. One of the beauties of trading is that you will get instant feedback on your own decisions. Matthew Poll scam In this review process, I focus my attention not on the outcomes of the trade but on the decisions I made. Was my position sizing ideal? Should I have moved my stop-loss? Did I follow my risk management plan? As any experienced trader will tell you, there are various times where poor trades end up being profitable while excellent trades don’t work out. To be able to improve as a trader, it is important that you learn from every single trade you place.


By following these day trading rules, I know that I can be consistently profitable and make excellent risk/reward trades. While risk management may sound like an abstract principle, I implement it by knowing my stop-loss ahead of placing any trade. I’m also aware of probably the most opportune times to trade and limit my trading when conditions aren’t ideal. Finally, I gain insight out of every trade I make with a thorough review process. Take the time to write down your trading rules to bring clarity to your trading and ensure you stay disciplined.

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