The Number One Rule as a Day Trader

When I first started trading, I thought I knew everything.

I was a hotshot options trader with little to no experience.

And after I made a couple hundred dollars on my first few trades, I thought I was invincible.

Then, very soon after, reality hit.

And I nearly turned a $25,000 account into nothing.

I was making all the mistakes a day-trader could make.

And since then, I’ve perfected the art.

There’s a thousand tips and tricks I could tell you on how to day trade.

But my biggest tip boils down to one phrase: “You’ll never go broke taking a profit.”

Surefire trades, one at a time is the way to ensure you don’t blow up your account like I did back in the day.

That means once you have a winning trade, you sell a little bit at a time into the profitable move, and you raise your stops to make sure that you don’t turn a profitable trade into a loser.

Yes, sometimes you’ll leave money on the table and say to yourself “Oh I should have let that go for longer.”

But for every time you say that, think about all the times that a trade like that didn’t go in your favor.

Think about the possibility of that stock hitting the top, and then selling off in a massive candle.

What happens if you didn’t have your stops in place?

Instead of taking profits and ending the day up, you’re licking your wounds and having an awful time exiting for a loss.

And god forbid you hold a stock overnight. Remember that stops do not trigger in after market hours and you can’t trade your options.

That means you have to wait for the opening bell.

At least during the day, we can react to what’s happening in a stock price.

Overnight holdings could result in you losing everything.

And I do mean everything.

A 50 cent triggered stop loss on 1000 shares during the day is $500 less for you.

A 20 dollar drop overnight on 1000 shares puts you $20,000 in the hole.

Do not turn a profitable trade into a loser.

Sell into the profitable move, adjust your stops, and stay liquid so you’ll have no surprises.

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