What You Should Know About Day Trading Rules (Part 1)

Usually, Day Trading lovers are those who dont like to hold their positions for days on end. Besides, they wanted to make a profit immediately. However, being a day trader is not easy, you have to understand the rules of day trading.

Lets take a look at some of the following Day Trading rules that you must follow:

Not an Investment

You must understand that Day Trading is not an investment. Day Trading is a short-term activity that is purely done to profit from the difference in price movements in one day.

There are a lot of day trading risks. One of them is the risk of volatility where currency fluctuations occur so quickly. It can bring benefits if you use it wisely. However, it can be disastrous if you execute an open position without good analysis and money management considerations.

Not Gambling

Never think that Day Trading is gambling. That mindset will make you trade without a plan, and tend to look for random profits.

Traders who have a gambler mindset will see the market as a playing area, not a place of business. This kind of trader will usually lose money. Meanwhile, those who see trading as a business area will be able to survive longer. The reason is, they can consistently generate profits by referring to money management and careful analysis.

Applying 5W and 1H

You must have careful planning in trading. The plan will make your trading more focused. If you are confused about where to start, you can apply the 5W and 1H strategies, namely What, Who, When, Where, Why, and How.

Observing the Market

In the first 15 minutes when the market session begins, prices will usually experience quite a high volatility. This will make it difficult for you to do analysis, especially for Price Action traders. Thus, you should wait for market sentiment to stabilize.

After 15 minutes have passed, you can start looking for opportunities based on your trading plan.

Reviewing Your Trading

Trading rules are often overlooked by novice traders, although their benefits are very important. There is always a lesson to be learned at the end of each trading session. Therefore, you should take the time to identify the success or failure you have after closing the trading session.

Using Stop Loss

To determine Stop Loss, you must pay attention to the conditions of price movements. Do not place Stop Loss at a level that is disproportionate or not commensurate with the real conditions that occur in the market. according to Investopedia, by using Stop Loss, you do not need to monitor the performance of a stock every day.

For example, you can place a Stop Loss randomly at any number of pips you want, between 25 pips or 50 pips. This has the potential to cause your account to close too early, even though the price may still move in the direction you analyzed earlier.