Then Friday morning, I did basically the same thing. However, this time most of the losses were due to losing trades from a single stock: $SSYS. I ended up losing almost $300 in that single stock when the most I should have lost in it should have $100. So after two and a half weeks of day trading; I'm about $75 away from break even. Every day has been one step forward then one step back eg. +$200/+$250 then the next -$200/-$250 then today -$400!!!. Basically 50% of my trades are good trades (some winners; some losers) while the others (in hindsight) appear totally random or extremely poor (like chasing a stock far above the ideal entry).
So I wrote down five basic rules that should help me improve my day trading:
- I must have strong conviction in the idea on the daily chart. Whether it is a flag, pull back, breakout or parabolic long/short and whether I found it on my own, off twitter or someone else's blog. Essentially I must really like the set up on the daily chart a lot!
- The stock must trigger from a clear intra-day set up. Do not try to anticipate the trigger; wait for confirmation! Also the set up must have a well defined stop loss and risk/reward better than 2:1.
- If I'm not getting in at the ideal buy point or within a penny or two of it; then pass on the trade or wait for it to dip back. Do not chase!!!
- Always take partial profits when my profit on the trade is 2 - 3 times what I risked on the trade. Take at least a 1/3 off for stocks I plan to swing and 1/2 off otherwise.
- Be patient with partial positions on winning trades and give them room to develop into big winners!
Looking for to improving on my results from the past 2 weeks and making some decent profits!
Good luck and good trading!