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6 MUST Know Trading Rules for Day Trading Beginners - YouTube
Channel: Humbled Trader
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there are six i mean six
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must know rules for day trading
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beginners to follow
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in order to avoid blowing up day trading
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especially in the current market
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conditions right now
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could be like the wild wild west where
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you can see
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three thousand percent gainers take off
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like a rocket
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and then a heavy sell-off on the stock
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to no bounds
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city as traders we must know how to
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protect ourselves
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and most importantly our trading
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accounts
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in these volatile market conditions
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after trading for seven years now
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i have some very simple yet extremely
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effective rules for day trading
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they'll help your journey to become and
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stay
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consistently profitable the six rules
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i'm about to share with you
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can definitely help new traders form a
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very solid foundation
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in their trading discipline such as not
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chasing hive the day breakout
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not adding to a loser and most
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importantly
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not forgetting to hit the like button at
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the bottom of the video
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as you start stay trading for a while
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you realize that knowing these patterns
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or news of a stock
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is just half of a story it's important
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to have a trade thesis
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yes but you cannot just hit by and go
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straight
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to chilling on the beach no trading is
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much more than that
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the most important rule in my daily
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trading routine
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is rule number one always have a trading
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plan
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specifically it needs to be a plan that
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includes an
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entry exit price and also the risk level
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for every single trade for example let's
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say i see a stock for a potential long
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i can only buy the stock when i see it
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consolidate around certain support
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levels
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with volume and it has to have found a
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bottom support
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as a level for me to risk off yes i
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understand that you might be thinking
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i'm limiting my trading profits
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by not trying to pick the very bottom of
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the stock
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or the very top if i'm trying to short
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but honestly for most day trading
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beginners
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waiting for confirmation and planning
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these entries
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with clear risk is going to make sure
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you profit from the meat of the move
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and limit the risks at the same time and
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a very crucial part of the trading plan
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is a potential risk reward of at least
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three
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to one that's of course three reward
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to one risk if the risk is more than
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that
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or if the stock is just consolidating
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sideways and can't
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give me a good reward of more than three
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then i'm perfectly fine
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leaving the stock alone just not trading
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it
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right sometimes the best trades are no
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trades
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and on a side note to planning your
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trade i really recommend
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new traders to stay away from small cap
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penny stocks
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and just to take them off your trading
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plans really
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in my opinion mid cap and large cap
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stocks
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are much more friendlier for new traders
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and their support and resistance levels
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are easier to plan
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out generally small cap penny stocks are
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companies that trade
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for less than five dollars a share such
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as
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opt which is currently trading around a
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dollar a share
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and solo right now around two dollars
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and forty cents
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these kind of stocks are basically just
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trash
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and they're very illiquid generally
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speaking your chances of actually
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picking the one out of
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thousands of penny stocks that actually
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becomes the crazy
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100 or 1 000 ripper is next to
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nothing and when these stocks do trade
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with above average volume
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their price action can seem pretty
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random
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and it's very hard to gain consistency
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if newer traders
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start out trading just these small cap
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penny stocks
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yes while you do need to follow a
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trading plan
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on whichever market cap stocks you
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choose to trade
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don't permanently become fixated on old
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ways of trading
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as traders is actually very important
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to stay flexible and adapt to the
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current market conditions
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so depending on the research you've done
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on the stock the current
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news or the market condition you could
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increase
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both the size and the trade period on
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the stock
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especially if the headline could
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fundamentally
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influence the company's share value is
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there a company take over
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imminent a conference call coming up or
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a potential dilution
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any of these fundamentally negative or
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positive news
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are worth potentially sizing in even
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more
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in your trade positions and then perhaps
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try to let
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the winners write out a lot longer which
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brings us to rule number two
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in trading analyze stock news like your
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life depends on it
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because your trading account depends on
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it
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definitely i make sure to analyze and
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study the news
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before i buy or short any stocks
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especially if the stock has made
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a significant drop most people are
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trained to buy any dip
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because that's the practice that would
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be used in investing
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not day trading though it could be very
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tempting to buy
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any stock when you see a drop huge in
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prices
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without realizing about the
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circumstances behind the crash
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by the dip right it has to bounce
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well that strategy works very well until
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the
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dips just keep on dipping and this is a
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very common new trader mistake
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especially on the small cap penny stocks
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buying the dips and averaging down to a
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loser
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depending on the severity of the news
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the stock may either bounce
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or just keep on crashing especially if
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the news is potential fraud
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or lawsuit picking bottoms on these
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stocks such as offer clip
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could be a very very bad idea
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i've done this before many years ago and
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i spent
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days and weeks paying for it
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in terms of regret sleepless nights and
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broken dishes since then i make sure to
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check the news and find the catalyst
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for any single stock i'm looking to buy
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or sell
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that's very important trust me this
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extra 5 to 10 seconds of work of
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a quick search on benzingo news is a
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game changer
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now we have rule number three step away
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from my trading computer
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this one here when i
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sense myself starting to feel emotional
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emotions and day trading are like small
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account
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and chat room alert they simply cannot
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work together but if you get into a
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routine of planning your trades and
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trading your plan like rule number one
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this will eventually allow yourself to
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be more detached
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from the money and keep your emotions in
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check when you're trading
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you see it's not difficult to make money
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in day trading
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but it's very hard to keep it one thing
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that
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helped me greatly with controlling
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emotions and hype
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when i was new to trading was to avoid
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trading the market open and i think this
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is a tip that might help you out
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and the reason is that the first 10
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minutes or 15 minutes
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after the non-opening bell is usually
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extremely volatile
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stop losses are getting hit market
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orders from hundreds of thousands of
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robin hooders
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are getting filled lambos are raining
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down from the skies
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it's a hot mess out of the gate if you
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are relatively new to trading
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i strongly recommend to avoid trading
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the market open by doing so this will
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give a new trader
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more time to analyze the stocks the news
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and the price action
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and playing out the trades basically
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following rule number one
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and two instead of panicking at the open
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and just
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fumbling your keyboard and blindly
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jumping into stocks
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most importantly this will help with
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controlling emotions in trading
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for many new traders the hardest part is
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not becoming
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emotionally attached to a trait and
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having
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one small loss leading to a string of
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bigger losses
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next we have rule number four be
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realistic
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about your trading profits take the meat
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of the move
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and do not outstay besides analyzing a
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stock before jumping into a trade
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you have to be realistic with a stock's
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upside potential
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intraday while you're day trading you
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can't just buy a stock and hold on to it
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and expect a 100 run each time
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i mean sure you see some small cap low
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float stocks
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going up one thousand three thousand
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percent in one day
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but how often does that happen right
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whether i'm buying the small caps or the
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large caps
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i don't expect the stocks to run to the
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moon every single time
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so you shouldn't either okay unless it's
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tesla stock
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it can just take off out of nowhere like
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nobody's business
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the point i'm trying to make is you
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shouldn't regret making small wins on a
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stock
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or mo on missing out and selling too
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early
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you can always buy the stock back when
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it dips and if the momentum an
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uptrend continues and it's the same
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thing when you're swinging or
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investing long term stocks like apple
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microsoft amazon and especially tesla
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dips every single time once a while so
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there's no need to panic
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that you're missing out on something
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huge for new traders
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especially if you have a small account
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do not
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aim for home runs focus on controlling
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your risk
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and look for base hits sure the profits
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are probably small
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but taking these small wins are less
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stressful
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and they will add up to your account
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slowly
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and the growth is exponential whining
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about missing profits and jumping back
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into trades due to fomo and the idea
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that
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oh i could have made so much more this
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stock owes me money
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now this could actually be a very
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negative
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and dangerous emotion because eventually
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that will lead
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to new traders revisiting trades and you
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start
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revenge trading and giving back profits
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i know because i'm guilty of that too
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when you are realistic
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about a trade it helps you ignore those
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dollar signs
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and becoming too attached to the money
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let me ask you something
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why do most people get into trading in
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the first place
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it's mostly for the money right but
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ironically
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if you focus on just the money you will
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fail in day trading
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if you're relatively new to the business
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starts trading with just
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one or two stocks per day take the meat
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of the move and be done
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don't follow every single scanner alert
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and go for more stocks due to fomo
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trading rule number five and it's an
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extremely important one actually
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always and i mean always smash
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the like button and meant to always
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prioritize
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risk management you see most traders
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fail
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not because they don't have winning
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strategies
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or they're using the wrong brokers or
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they don't have short locates
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it's because they focus too much on the
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shiny dollar signs
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the money like we talked about earlier
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so much so that they
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ignore their risk and failed to see the
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potential downside
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if they were wrong without proper risk
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management
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it's going to be very difficult to grow
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your account
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without stops and without setting max
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losses for the day
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the trader is likely to first try to
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make back small losses
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then over trade and start making more
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mistakes and eventually this is how many
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new traders
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blow up day trading is risky and that's
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why you shouldn't be trading with the
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money
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you cannot afford to lose if you use a
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margin account too short
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or have the cash settled within the same
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day that's great
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but for newer traders please do not use
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margin buying power that you cannot
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afford
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to lose i have a video on how much money
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do you need
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to start day trading if you're
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interested so make sure your trading
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funds are separate
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from the money for your emergency funds
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and you have separate
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savings and investing accounts as well
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managing risk is important
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but at the same time you need to accept
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the fact that
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taking risks is necessary in day trading
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like i said
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day trading is a risky business so you
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will need to take
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calculated and planned risks and at the
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same time
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manage them so you won't go overboard
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it's kind of funny because while we day
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traders are taking
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advantage of profiting from short-term
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momentum we must have a very long-term
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outlook
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in this trading business and from all
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the rules i mentioned
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tell me which ones do you find new and
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helpful
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and at the same time share some of your
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trading rules with me
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in the comment section below if you
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enjoyed the video
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please remember to drop a like and
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subscribe
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thank you guys so much for watching as
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always i'm the humble trader
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and i'll see you guys next week hey guys
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thanks for watching
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i hope you enjoyed the video and the bad
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jokes if you want to see more day
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trading content
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make sure to subscribe and follow me on
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twitter
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and instagram for more if you'd like to
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trade with me daily
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and get my free weekend watch list and
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trading journal
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make sure to check out the links below
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for more resources
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stay green stay positive and i'll see
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you guys next time
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