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Day Trading Success- The Key Is Survival
Most new traders tend to focus just about all their time and
energy on finding nearly perfect "setups", but trade setups, even
very good ones, are *not* the key to successful trading. It's the
*way* you trade your setups that keeps your losses smaller than
your gains. And this is the single most essential key to trading
success. To me, the process of limiting losses is more than just
money management...it is survival.
I can't give you a list of mechanical survival rules that will
take the place of experience and make you a successful trader
overnight, but if you stick to the following principles in your
trading, you'll be on track. You'll be doing just about the
opposite of the crowd, and you'll eventually learn to limit your
losses. Limiting your losses is the only way I know to make money
in this business.
The following guidelines will sound radical, but they have
guided me in making my living from trading for many years.
1. If a trade doesn't go your way within the first one
to five minutes, get out. I usually get out within one or two
minutes as soon as my perceived edge is gone.
2. If a trade goes against you in the first few
seconds, begin drawing in your hard stop and/ or your target,
trying to get out of the trade at break even.
3. Never let your hard stops get hit. When it happens,
you may want to take a break and get some fresh air.
4. Hard stops are adjusted to market conditions. At the
moment (July 6,2005) I am using 1.50 point hard stops on the SP
futures.
5. Never move your hard stop away from your entry
point, hoping that a bad trade will turn around.
6. If you find yourself *hoping* as you trade, it is a
clear sign that you are not following good survival (money
management) principles.
It will be impossible to put these principles together without
a set of high-probability setups. Without good setups, trading is
just a flip of the coin.
Mike Reed is author of TradeStalker's RBI Trader's Updates. He
has been trading the Market for 23 years. When he got his start
as a trader, Mike was plotting prices on paper tape as the
internet had not yet been "born" as we know it today. Years of
experience have really given him a feel for the Market action.
His support and resistance numbers have been published on the
internet since 1996. He has a wide readership that includes day
traders, floor traders, locals and hedge fund managers. Mike's
nightly support and resistance zones are specific and incredibly
accurate. He offers an unlimited free trial of his nightly
TradeStalker RBI Trader's Updates. http://www.TradeStalker.com
 MORE RESOURCES updated Tue. March / 09 / 2021
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