Rules for Day Trading – A Guest Post by Tim Davies

Observations on Day Trading Forex for Beginners

I thought it’d be useful to write out my experiences with multiple forms of day trading Forex over the last few weeks. As it may serve as helpful to others wanting to get into the arena.

Call it Day Trading Forex for Beginners

We’ve all read trading in the zone, and memorised all the cliché statements. But putting it into place is a completely different kettle of fish! Actually trading your savings, in order to earn a living from it day in day out is a lot more difficult than you think.

Day Trading Forex for a living and the Rules for Day Trading

To give some context. I’m currently unemployed and have no primary source of income. Therefore I have that playing in the back of my mind. I know my net take home salary would have been around £500 a week. So in the back of my mind I’ve been saying to myself all you’ve got to do is make that a week and you can trade full time!

Being my confident self, I dived into my scalping strategies from this the middle of March, and immediately realised a return of 2.5% in just two days! Around half of my £500 target. A few hours later, I took a day trade Richard (Able Trading) has been teaching me and boom another 2.5%! Happy days.

Greed takes over in Day Trading Forex

I’d basically hit my target, but why stop there eh? I got up fresh and early the next day. To go conquer the market once again, being on lock-down at the moment I thought this was the prime opportunity.

Throughout Wednesday I proceeded to pretty much give back the majority of what I’d made the previous two days scalping, handing back around 3%

This was due to a mixture of both technical issues (internet cut out right as I was attempting to take my profit) and poor trade placements / management.

Most bad behaviour comes from insecurity and emotions Trading Forex

I then decided to hold off on a few strategies that I was less confident in, and proceeded to trade just 1 of my chosen scalping strategies from Thursday onward. As this was the one I have been most confident with.

Thursday rolls around, and I’m now 4 days in with nothing to show for all my hard work watching the screens all day. The market is incredibly indecisive and I end up taking no trades.

Now for Friday, which is where I’m most embarrassed of my trading.

I set up the one click trading facility on my broker, to instantly buy or sell 1 lot of EUR/USD at the market price, so i could take advantage of when i was right.

But my strategy hadn’t set up correctly

It is pretty difficult watching a setup form for hours, enter your ideal entry zone, and it just blast straight through without allowing it to set up correctly and meet your criteria.

Your trade thesis was correct, it ends up pushing lower and lower past where your entry was. So, my trade theory was correct! I may as well just short 1 lot at the market, no stop, no profit target, and ride out the momentum I was meant to be capturing if it had set up correctly.

Well, we all know this is just stupid and exactly how gamblers would attempt the market, you enter and it goes down 2 ticks, you’re up £50, decent, if it just goes down some more I’ll capture back them losses, wait stop being an idiot you’re not following your plan, okay I’ll exit when it hits £75.

It goes back against you, down to £0, then -£20, you finally slap yourself and exit the “trade” for ANOTHER loss.

I would be lying if I said I didn’t do this a few times…

First one of the many rules for day trading, do not do what I just did!

Week 1 end

When the dust finally settled for the week, I’d ended up going from 6.8% up for the week, down to 2.5%. A 2.5% return for a week’s work is good! But when you’ve consciously handed back so much of what you had to the market via errors and emotional trading, it really gets you down. If they had been excellent trades that I’d taken perfectly, that just didn’t play out I would’ve been annoyed but nowhere near as angry as I was because they are a product of trading. Losses are unavoidable, but losses due to terrible trading certainly are avoidable.

Emotional distress

Lastly let us discuss the emotional drain this has on you. Monday & Tuesday I was elated, my first week of trading for a living and I had smashed all expectations I had! I was the man, I was so confident in my abilities, that I could sense the direction and flow of the market. Wednesday – Friday rolls round and proceeds to kick me in the ass, bringing me crashing back down to Earth. Wednesday to Friday I was a miserable, tired b*st*rd and proceeded to take it out on my family. This is totally unacceptable in my opinion.

Trading Forex for Beginner and Rules for Trading Top Tips

I have found a few helpful nuggets worth sharing with people to help cope with the swings you’ll likely encounter.

Walk away from the screens! I found this super helpful when my trades were either close to my stop loss or profit target, I’d often sit there and want to either cut my profit short or cut my trade short before my stop loss was hit, sitting there almost biting my nails in anxiety. Walking away whenever I noticed I was doing this it helped me re calibrate.

Set alerts and then move onto another chart. This also helped me, another helpful rule for day trading, trading view allows push notifications to be sent to your phone. I would set alerts both above and below my trade to alert me of any significant movement. I would also then move onto another chart I potentially had on watch. I did this because otherwise I’d sit and just watch the trade play out and over hours, causing quite a bit of stress over my analysis, management, entry etc.

Positive improvements for Trading Forex for Beginners

Finally, I though there is a positive note to this blog. I’ve recently learned how Richard (Able Trading) day trades, and so far, I’ve made a good success of it, making around 7% profit in 2 weeks of trading! This form of trading is a lot more manageable for me as there are criteria to be met, alignments to be made, and higher timeframe biases to incorporate. I previously did a blog post on why I preferred “setup” trading. This I believe is exactly what should be taught in any ‘Trading Forex for Beginners’ books. The clue is in the name as it means you need a clear setup to form for a trade to be valid, and if it does not, you move on to the next market and look. Simple, and almost robotic. This is exactly what you need rules for day trading.

It is easy to see why so many get chopped up in this industry, blow a large percentage of their account, and then pack it in as they can’t handle the pressures.

I think the moral of the story here is very in keeping with the cliché statements made by multiple trading books.

RULES FOR DAY TRADING:

  1. First and foremost, accept that there needs to be a strict set of rules for day trading.
  2. Accept that day trading forex for beginners is going to be hard work.
  3. Do not trade for the money, or the excitement.
  4. Define your parameters and execute them with zero emotion. If a set up isn’t valid, don’t take it!
  5. Do not set monetary targets to hit each week.
  6. Only day trade with a strategy you are super confident at. (obtain a good solid strategy i.e. Able Trading provides these in the courses for day trading Forex and Swing Trading)
  7. Lastly, do not take your emotions to or from work (the market) your family is there to support you, not to act as vents for your frustration.

Get Started here! Learn to Day Trade!