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Daily Trading Rules for New Stock Traders

New to the game of day trading but can’t wait to get started? I don’t blame you. Day trading can be an exciting and profitable business. However, it is best for the newbie trader to keep in mind some important rules of day trading so that you can make the most of your opportunities without losing your shirt!

As a reminder, day trading is different from investing. When you invest in a stock like (Nasdaq: AMZN), you are riding the stock for the long haul. You can hold the stock for years or even decades. This is not the case with day trading: a day trader buys and sells a stock on the same day (intraday trade).

The goal of day trading is to get in, make a quick profit, and get out. Over time, these profits will add up and can help you earn a lot of money. Of course, don’t forget that you could also lose a lot of money if you’re not careful. That’s why it’s good to know the day trading rules below to keep yourself out of trouble.

Day trading rules you should know

When embarking on a rewarding yet risky business, it is always good to have a few rules of the road to get you out of trouble and stay on track. Day trading for beginners is difficult, but knowing these daily trading rules can help things go smoothly.

Of course, these are not immutable laws of nature and you are free to adapt them to your own needs. After all, day trading stocks is a little different for each investor and you may need to adapt these rules of thumb to suit your own practices and needs.

Finally, remember that these rules are not meant to be oppressive. Day trading should be fun and exciting for you. After all, who doesn’t like to make a lot of money playing in the market?

So let’s start with the rules of day trading for beginners:

The five-day trading rules for rookies

Rule 1: You must have a plan

The absolute rule of the first day of trading is that you must have an execution plan. You cannot get into this blind or you will lose a lot of money quickly. As the old cliché goes, “Not having a plan is planning to fail.”

There is a lot of daily trading strategies, comprising:

  • Daily pivot
  • Discoloration
  • Movement trading
  • scalping

Day trading strategies are not static and change over time. Not to mention that there are many more than the ones I have listed here. But you should always familiarize yourself with at least these most common daily trading strategies and then decide which one is best for you.

Rule 2: Learn to use play money

As rule # 2 in day trading, I strongly suggest that you do not start with real money. If you are looking for a good stock market simulator, my colleague Matt Makowski put together an excellent list of the best.

Day trading requires skill. You weren’t born with these skills… they weren’t loaded into your brain. You have to teach yourself how to trade. The best way to do this is to place trades with counterfeit money and see what happens.

Once you start developing your skills as a fake trader, you will be ready to slowly move from the kiddie pool to the Olympic-sized tank that is day trading. And you’ll do it armed with much-needed skills and knowledge that you previously lacked.

Rule 3: enter, exit, earn money

For day trading rule # 3, my advice is that with every position you take, you will need an entry plan and an exit plan. In other words, you need to know at what price you want to buy the stock… and at what price you want to sell it.

Of course, sometimes you will make mistakes. And these mistakes can cost you money. But if you generally stick to your entry and exit plans, you’ll be much better off.

Another important thing to note: As a newbie trader, you should consider taking only one or two positions at most during a daily trading session, as you certainly don’t want to have too much on your plate. Tracking your positions so that you can determine the right time to exit is essential, and having too many positions can make this process too overwhelming for a newbie trader.

Rule 4: Check your emotions at the door

Every now and then I like to watch a sad movie and have a good cry. It’s a good time to have emotions. Do you know what time is wrong? When you conduct a stock market transaction. Never trade with your emotions.

This is one of the reasons that having a comprehensive plan and, more specifically, an entry and exit strategy in place for each position becomes so important. It keeps you from trading from a place of greed or extreme fear. And that’s why checking your emotions at the door is rule # 4 of day trading.

Instead, you use your rational, calculating brain to figure out when to place a trade and when to exit. Sometimes it won’t feel right. We all took our pieces on the stock market. But in the end, by trading from a place of reason rather than emotion, you will go a long way in becoming a successful trader… and not destroying your bank account instead.

Rule 5: Limit Your Losses

Rule # 5 in day trading is to limit your losses. Making money on the stock market is fun, but racking up huge losses can destroy a person. You don’t want to experience this, and you shouldn’t have to if you’re playing well.

First of all: never trade with money you can’t afford to lose, especially in the short term. It is not worth becoming homeless or starving to do business. Pay your bills. Meet your basic needs. And then trade with whatever you want that’s left over from there.

Another important point is that there are strategies you can use, such as issuing a stop-loss or other types of limit orders, which can prevent you from losing big on a trade. . Familiarize yourself with these tools and use them to the best of their ability.

A bonus trading rule: don’t forget to have fun

As a child, both of my parents were stock traders. I remember when I was a little boy my dad would take me upstairs to his brokerage house and I was amazed to see the men and women in suits doing their trades all day.

Day trading is serious business, but you shouldn’t forget to profit from the process while you are doing it. As with most good things in life, the end point matters, but sometimes the journey is even more important. Don’t forget to enjoy the ride along the way.

Now that you have some good day-to-day trading basics at your fingertips, it’s time to start gaining some experience with play money on a simulator and develop the knowledge you need. Go trade, my friend. And if you’re ready to step into prime time and start trading real money, then the odds are always in your favor.

Read more : Best Daily Trading Platforms


Brian M. Reiser holds a Bachelor of Science in Management with a concentration in Finance from Binghamton University School of Management.

He also holds a BA in Philosophy from Columbia University and an MA in Philosophy from the University of South Florida.

His primary interests at Investment U include personal finance, debt, tech stocks and more.

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