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The Secret to Making Money in the Markets

Day Trading Rules #6

DON'T CHASE THE MARKET. If you are slow, and miss a day trade that suddenly looks like it would have made you a fortune, do NOT panic and try to jump in late - you will almost certainly be buying the top or selling the bottom. Remember that the market will be there tomorrow, and the day after, and for ever, so ANY trade, no matter how important it looks, can be ignored if necessary. Keeping your powder dry, and being ready for the next one, is more important than hitting every day trading opportunity you see. Many successful day traders only trade for a few hours a day - they miss plenty of action but don't care, because they know the market will be around when they come back.

Day Trading Rules #7

DON'T OVERTRADE. Similar to rule number 6, don't ever trade unless you are ABSOLUTELY sure. Never day trade because you are bored, or need some excitement. Buy a Sony Playstation instead. Sometimes an entire day goes by, and the Camarilla levels are not hit. You may look at the charts and think you see lost opprtunities:- relax, what you actually see are instances where the floor traders will bank your cash. Stay detached from it, and remember that if today was a chop day, tomorrow will probably trend well, and enable you to make easy profits. Learn to sit on your hands!


Day Trading Rules #8

TRADE WITH THE TREND. It doesn't matter how strong a swimmer you are; if you try to swim against the tide, you WILL drown. Trying to pick tops and bottoms is the easiest way to the poor house. The market is perverse - it can ALWAYS go higher, and it can ALWAYS fall lower than you imagine possible. And it will ALWAYS do this in a way that causes the MAXIMUM unpleasantness to the MAXIMUM number of people. Sticking with the trend puts you on the right side from the start. The Camarilla {b} Equation is solely concerned with capturing the large powerful trend moves beyond the narrow channel that otherwise defines a typical day.

Day Trading Rules #9

CARE MORE ABOUT PROTECTING YOUR CAPITAL THAN INCREASING PROFITS. You will do best in the markets if you worry more about stopping losses, than if you try to focus on making money. This sounds hard to believe, but it is true. The markets are a giant money-making machine; if you can latch on to them, you WILL make money. The price of this free ride, however is to understand that the beast will buck and roll around and generally try to dislodge you, and you have to know when to let go. The root of good money management is to control to the dime how much you are prepared to lose on a day trade. At SureFireThing, we seldom commit more than 5% of our working capital to any individual trade. Mostly we pull a trade if it costs us more than 2%. We would have to suffer an INCREDIBLE string of losers in order to go broke, and we recommend that you do the same. If you do not have sufficient capital to day trade expensive instruments, we suggest you save some more before trying. Being undercapitalised is almost as bad as not controlling your losses.

Day Trading Rules #10

BE WARY AROUND NEWS ANNOUNCEMENTS. It is a bad idea to be holding a position just before a major news announcement (e.g. the release of the jobless figures). You are not smart enough to know how the markets will react to the news, and are therefore guessing. Don't do it! To make your life easier, here's a link to a great Calendar site, who usually spot (and categorize!) all the major upcomings.