I am writing a consolidated list of rules for trading for wehich the print out should be taken and pasted in front of the trading screen so that during lull period one can have a look of the same and be reminded of the same to avoid known pitfalls.
1. One should not put all eggs in one basket meaning do not risk more than 10% of the earmarked trading capital for a single trade.
2. Stop loss is a pre requisite.
3. Avoid being a compulsive trader and thus avoid overtarding as overtrading a clear recipe for more losses.
4. One should track a trade so that a profit making trade is never converted into a loss making trade.
5. Be with the trend of the market and if trend is not clear than avoid trading.
6. One will make profit only in active markets.
7. Preferably if one is a large scale investor than one should invest in a number of markets which may range from equity,forex, derivatives etc.
8. As a day trader avoid trade to be struck as a limit order and undertake trading at the offer price to take advantage of trend.
9. As a successful day trader have another account earmarked where all the profit should be parked.
10. Avoid trading with a view to scalp the profit.
I will be adding a few more tips for day traders so that they can carry a cheque from their broker to bank laughingly.
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24 May 2008
Day Traders Golden Trading Rules
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