7 Top Day Trading Rules: A Quick Roundup


Day trading is very popular among those who want to earn quick bucks from the market. It’s practically one of the most sought-after trading styles around. And when you are day trading, you have to follow written and unwritten day trading rules.

day trading

We have gathered the top day trading rules that you should know about, as well as the mistakes you should avoid when day trading.

Come Up with a Trading Plan

The old adage is still true today: if you fail to plan, you plan to fail.

This means that you cannot succeed in trading if you play everything by ear. You have to construct a trading plan which will tell you the specifics of your entry, exit, and money management criteria.

You must know that this could be really time-consuming, though it all pays off once you start the ball rolling.

The benefits of having a trading plan are not limited to knowing where your trade is heading. You also get to have a record of the things you have done throughout your trading career.

Through comparison and analysis, you can determine which trading plan is effective for a specific market condition. You can identify the weak parts of your plans. Therefore, you can always know which part to change and to adjust to have a better shot at beating the market.

Additionally, modern technology allows us to backtest trading strategies quite easily over historical data. Backtesting enables you to see if your plan is plausible and effective.

Of course, once you have established the viability of your trading plan, kick it off and treat it like gospel: stick to it like glue.

Don’t ever be tempted to trade outside your strategy. That in itself is already a wrong move and poor tactic.

Take advantage of Technology

Even if age-old dictums still work in trading, you must know that day trading is also changing.  And with the changing landscape of the day trading industry, technology accomplishes breakthroughs after breakthroughs.

That being said, it’s always a good idea to use technology on your favor.

Nowadays, lots of trading platforms make day trading easier. They provide a wide-ranging variety of tools to let your analyze and determine trading opportunities. 
Backtesting, as mentioned above, lets you test an idea against historical data before you risk any cash.

Additionally, you can get market updates and charts via your phones and laptops. That means faster and more convenient day trading.

Learn what new features are up for the grabbing. You can never take any kind of day trading help for granted.

Do not Take Unnecessary Risks

You have to accept the fact that day trading entails inherent risks. And you have to carefully pick which risks you will face.

Some traders think that the more risks they take on, the higher the reward they can get. However, this can lead to them incurring unnecessary losses to their trading capital because of unnecessary risks.

Before you enter a trade with substantial risk, make sure that the risk is worth taking. Pick your battles if you want to win the war.

Don’t bet something You can’t Afford to Lose

The money that you will be using in day trading should be money that’s not intended for any other purposes.

Before you start trading, you must save up ample amount of money that you can risk losing in a trade. You shouldn’t risk the money you intend to spend as loan or mortgage payments. Do not touch the money for your monthly bills or groceries.

Have a separate fund of cash if you want to trade. This way, even if you lose, your daily lifestyle will not be significantly affected. Your personal budget will be untouched. You will still have that nagging feeling to bet something bigger than your capital, but it’s better to keep your other personal finances secure before you dive into the market.

Always Check the Facts

This can be very exhaustive and time consuming, but it will definitely help you protect your trades and make informed decisions.

You have to hit the books and study up on both fundamental and technical analysis. This is because facts shape up investors’ sentiment. Facts affect market movements. So being well-versed in facts lets you easily understand the market and know its next move at the earliest signal.

Use Stop Loss Orders

A stop loss order is a specified amount that you are willing to lose per trade. It works in a way that lessens you exposure to risks.

Whenever your trade reaches the predetermined stop loss level, the trade will automatically close out, leaving you with fewer losses than you could incur if you didn’t put that order.

This can save you from being jittery and anxious over your trade because you know that you stand to lose only a particular amount of capital. And since emotions are less, you can focus on establishing a systematic way of doing your trades.


The most important thing to do is to make sure that your day trading plan is crystal-clear. Stick to it no matter what, but learn to exit the trade when the tide goes against you. 

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