(2) Three E’s: Enter, Exit & Escape
It is one of the basic day trading rules for first time traders or beginners. Every day trade require traders to set an enter price, an exit price as well as an escape price.
Entry price is the share price at which you are willing to enter an intraday trade. Similarly, exit price is the share price at which you are willing to exit an intraday trade profitably.
On the other hand, escape price in worst-case scenario is the share price at which you will escape a trade. Once you shortlisted best day trading stocks, you need to enter the trade.
Your entry price should be the best & most profitable price for the trade. After you get an entry, your next target is the exit price of script to gain maximum possible profits.
However, if an intraday trade doesn’t work as per your expectations, escape price gains significance. Escape price is essential to minimize your losses in adverse condition.
(3) Trade With Money You Can Afford To Lose
It is one of the most significant & basic day trading rules for intraday traders. Day trading is a highly risky option in stock markets.
You can lose money within few minutes of a wrong trade. You can even lose more money depending on how much you have leveraged your positions.
You are advised for intraday or margin trading with money you can afford to lose. You should never trade with all your money in a single trade. You should never utilize emergency funds for day trading.
You should only trade with surplus amount of money that you can afford to lose. However, you should never underestimate the significance of keeping aside money for basic living expenses.
It will help you to ensure that you are not increasing the risk quotient while trading.
- Day Trading Rules: Shutterstock