3. Follow Your Stop-Losses
If you follow your stop-losses there
should be no reason why you "lose it all." Many like to
joke about day traders making $200,000 and then losing it in a single day. This
should not be possible if they had followed their stop-loss. The very
basics of day trading strategy are to have an EPS: Entry Point,
Profit Goal, and Stop-Loss. If you reach the profit goal, sell the
stock. If you reach the stop-loss, sell the stock.
If you buy the stock and within a
minute the price drops to your stop-loss, sell the stock. If the
price is already dropping to the stop-loss, then you may have been
wrong about the reversal signal and the stock may continue going
If liquidity is the reason they "lost everything," then that was their mistake in
trading a stock with low monthly volume. Every stock you trade should have
a minimum volume of 2 million, with a volume of 4 million being
4. Don't Be Greedy
Greed and emotion will destroy you.
Greed is what makes day trading equivalent to gambling. Do you want
to win or do you want to gamble? If you are day trading to win, then
don't be greedy. Get your 1% profit and be satisfied with it. Don't
feel bad about missing out on a potential 5% gain.
You are saving yourself a lot of time,
money, and headache from all the times you would have lost chasing
that 5% gain.
$130,000 Account Value can Easily Generate $90,000 per Year
These steps are intended to grow your account value until you can actually start living from the money generated by day trading. While the $120,000 gain over the course of 5 years averages to only $24,000 per year, if you do not spend that money and grow your account to the $130,000 then you can easily generate $90,000 per year day trading.
This means that if you day trade part-time, by following these steps for 5 years you could potentially quit your day job and make $90,000 per year day trading.
What About Commission and Fees?
While most brokers charge anywhere
between $5 and $10 per trade, these calculations assume zero
commission because there is a broker that offers $0 Commission
Stocks vs Forex: Why Trade Forex?
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Day Trading Myths
How to Day Trade with Daily Volatility (Stock Selection)
Day Trading Strategy Basics
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