Day Trade to Win

Money Stacks Success Day Trade to Win

Learn how to day trade to win. Day trading can be like gambling if you don't have a strategy, if you don't follow your strategy, or if you are always chasing unlikely breakouts or huge percentage gains. However, with a realistic strategy (that you actually follow) you can day trade to win.

Realistic Strategy

A good strategy needs to have clear entry and exit points to the trade. You need to have a clear EPS: Entry Point, Profit Goal, and Stop-loss. The entry point can just be when it appears that the trend is reversing into the direction you want to trade. The profit goal is the percentage gain you want to earn on the trade. The stop-loss is the point where you sell the stock at a loss in order to avoid further losses. However, by using a trailing stop-loss you can sometimes still make a profit by selling before the trend goes against you too much.

These rules need to be realistic. If you set your profit goal to 5%, then you are going to lose on the trade most of the time, because even stocks that have an average volatility over 5% will rarely move a full 5% in one direction without backtracking. In addition, we cannot predict the future, so it is impossible to know for sure what will be the lowest or highest points of the day in order to capture that 5%.

It is important to realize that the lower your profit goal percentage, the more likely you will be successful in reaching it.

Related: Stocks vs Forex: Why Trade Forex?

EPS1 Day Trading Strategy™

A realistic starting strategy is the EPS1 Day Trading Strategy which represents a Profit Goal and Stop-loss of 1%. By using this strategy, you are effectively managing risk by deciding that the most you are willing to lose on the trade is 1% of your account value.

While having a profit goal of 1% might not seem like much, the effects of leveraging and compounding actually can result in huge yearly gains. Making a 1% gain per week translates into 68% gain per year, which is well above the 10% pursued by investors. This is the power of compounding.

Likewise, leveraging has a similar effect: by trading with four times your account value, that 1% gain is actually a 4% gain on your money. For example, if a trader has an account balance of $25,000, they are able to buy and sell four times that amount worth of stocks ($100,000). A 1% increase would be $1,000 which is a 4% increase on their actual account balance of $25,000.

However, leveraging can have the opposite effect as well: a 1% loss on margin can result in a 4% loss on the account value. Therefore, while it may be alright to accept a 1% gain on the trade value, you may want to limit your stop-loss to keep the total losses at 1% of your account value. Essentially, never risk more than 1% of your actual account value ($25,000 x 0.01 = $250), whereas the 1% profit goal applies to the trade value ($100,000 x 0.01 = $1,000).

EPS1 Day Trading Strategy™

E - Entry Point is Buy/Sell with Trend

P - Profit Goal is 1% of Trade Value

S - Stop-Loss is -1% of Account Value

Download this low-cost Stock Profit Calculator to easily calculate your stop-losses and profit goals.

Day Trade to Win: Follow Your Strategy

Now you have a winning strategy, but will you day trade to win or gamble? Emotion and greed are the enemies of all day traders. They will destroy you if you don't keep them in balance. All you have to do is get in the trade while it's going in the direction you want, get your 1% profit, and get out of the trade. Don't worry about missing out on a 5% increase, because you are saving thousands on all the times you would have attempted that 5% and lost money.

In addition, it will not benefit you if you do not follow it. The biggest mistake day traders make is ignoring their stop-losses.

If you buy a stock, and it almost immediately hits your stop-loss, then sell the stock. Yes, you just bought the stock, but if it is already hitting your stop-loss then it is very likely you were wrong about the reversal signal and it will continue trending against you.

Definitely do not add to trade. Maybe adding to the trade is a good idea when you are planning to invest in a company long-term, but we are not investing. We are day trading. When trading with volatile stocks, a trade could move against you by 10% or more. Then, you are stuck either waiting until the stock goes back up, which could take months, or you are forced to sell at a huge loss.

Again, day trading is all about risk management. Limit your risk to 1% of your account value. It is also a good idea to use a mental trailing stop-loss, which simply means you sell if at any point in time the stock goes against you by 1%. If you were aiming for a 1.5% gain and the stock goes up 1.4% but then trends back down, then sell it if it hits 0.4%. This allows you to at least make 0.4% on the trade instead of losing money.

High Success is Better than Breakouts

Breakouts and huge price moves are somewhat rare events. If you try to trade huge price moves, you are going to have a low success rate. However, if you attempt to gain 1% profit on a stock that moves an average of 5% or more daily, then your success rate will be much higher, making your strategy more reliable and realistic to accomplish.

There are a lot of day traders online who claim to only trade breakouts and who teach that trading breakouts is the best way to day trade. They convince people that the only way to be successful is by joining their training program to learn how to identify these rare events. Guess what? These people are making money from people joining their training program, rather than from day trading. No one can predict the future, so it's better to have a strategy that prevails within the realm of high probability.

While you are calmly getting your 1% and earning a reliable yearly income, these breakout traders are developing high blood pressure and heart disease while they watch the market all day looking for low probability price swings.

Day Trade to Win

Day trading is not a get-rich-quick scheme: it does take a lot of time and practice to get good at it. However, day trading can be a part-time job that pays a full-time income. If you want to day trade to win, then you need to learn as much as you can about day trading and practice with small amounts of money before you actually begin trying to make money.

Most day traders lose money, because they are inexperienced and are unwilling to take the time to get good at it. Read Learn How to Day Trade in 3 Steps for more information about day trading.

Stocks vs Forex: Why Trade Forex?

Want to easily calculate your stop-loss and profit goals?

Download this easy-to-use Stock Profit Calculator. Just type in the stock price and it will automatically fill with stop-losses and profit goals. You can also change the percentages to match your personal needs, as well as enter in your margin use in order to keep your stop-loss at -1% of your account value.

Normally $15, the cost is currently only $9.

Stock Profit Calculator for Daytrading/Day traders -

Get the Stock Profit Calculator now for $15 $9.

Learn How to Day Trade in 3 Steps

How to Day Trade with Daily Volatility (Stock Selection)

Day Trading Strategy Basics

How it Actually Feels to Day Trade

Day Trading Myths

Best Online Stock Trade with $0 Commission

Day Trade Articles

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