I am a consistently profitable Day Trader. I say this because you should not take advice from someone that isn’t successful enough to make a living at it. Of course anyone could say this, so judge the quality of the advice for yourself.
I’ll also note that I’m an asshole. Not to everyone though. If you really need help and you’re clearly putting in the effort, I’ll give you my time and energy to help improve your trading. But if your lazy and just want to make quick $$, I’m going to call you out.
As I’ve said before in other posts - Day Trading is NOT easy. Anyone that tells you otherwise is either an idiot or trying to sell you something (or both).
I’ve also said that even though it is difficult, it is very doable. If you put in the time and effort there is no reason you can’t be a profitable Day Trader.
Around six months ago I wrote out some tips on here, these can be added to those, although some are repeated given how important they are.
So, in no particular order:
1 - Do not restrict yourself to just “Day Trading”. Every great Day Trader is also a great Swing Trader. Anyone who tells you that Day Traders never hold positions overnight immediately disqualifies themselves from saying anything else, as they are a moron. In fact, I typically won’t Day Trade a stock unless I like the Daily chart. Why? Because let’s say I buy a stock and the market reversed. Now if I picked the right stock (more on that in a bit), it won’t drop as much as the market does, but I’m still down on it. For this example I buy 2,000 shares of stock XYZ at 50 and SPY goes from 390 to 388.20. The stock might drop to 49.60. I know the stock is strong, the technicals are all in line, and it’s well above its Daily support indicators. I also know SPY hasn’t had a technical breakdown. Rather than take the $800 loss, I can hold XYZ confident that on the next bounce for the market that it will go above $50.
The point is - be flexible.
2 - Speaking of being flexible, have many different tools in your trading repertoire. You don’t have to just go Long or Short. Sometimes a better play might be a Call Debit Spread for instance. Many mornings I’ll see a volatile stock up a lot (Boeing for example). So instead of buying the stock, I’ll do a CDS instead. On BA I did a 255/260 CDS for a $1.20 debit, and sold it later for a $3.60 credit - a 200% return (gave $120 per contract, got $360 per contract, for a net gain of $240 per contract). I might have made more just buying the stock, but instead I took a conservative approach just in case the market reversed.
3 - Do not hold a position, either in stock or options, through earnings. The result is too unpredictable with the stock, and the options will lose tremendous value through IV reduction. It’s a pure gamble.
4 - Get off that one stock. Maybe you got your ass kicked by a stock early in the day. So you keep going back to it so you can get “even”. At the end of the day your account doesn’t care if you lost $1,000 in one stock and made $1,000 in another. Choose the stocks based on the market and the technicals, not because it “beat” you earlier in the day.
5 - Stop chasing losses and/or prematurely taking profits. Traders tend to stay in losing trades longer than they should, and exit profitable ones too early to lock in their gain out of fear. This also goes for averaging down - don’t do it. Averaging up works a lot better.
6 - Understand your trade before you enter it. If you buy a Stock at $50, do you know what your stop will be? Do you have the right entry? And with options, what is your exit strategy if it goes against you? Know where is support/resistance, VWAP, etc. And most important - what is the market doing? Note - I rarely use stops, almost all of my stops are mental, but this is an individual traders choice. I’ll just note that you should not be using stops on stocks that have huge swings. You’ll get knocked out of a trade before you ever had a chance.
7 - If you don’t fully understand something, don’t do it. For example, don’t enter into an option spread unless you completely get how it works, how to leg out if it goes against you, and when to take profits. Take the time to learn it before you do it.
8 - Very Important, perhaps most important (I did say these would be in no particular order) - when Day Trading you want to be going long on stocks that have Relative Strength against SPY and short on those that have Relative Weakness. I am NOT talking about RSI (a crap indicator btw). I’m talking about when SPY drops during the day, notice which stocks held up. Those are the ones you want to buy when SPY rebounds. I can not stress enough how important and central this is to your success. A vast majority of stocks will follow the market. If on the 5 min chart SPY is down down down and stock XYZ is up up up, or even flat, you know that stock is strong. That’s the one you want to have when SPY rebounds.
9 - Many Day Traders trade on their own. However I have found that trading in a solid community of traders, with a great chat room only increases your success. Especially for beginners.
10 - However, if you’re in that chat room, don’t chase someone else’s day trade unless you analyzed it yourself. You may miss some opportunities doing this, but you’ll also prevent yourself from being trapped in a trade you didn’t understand.
11 - The idea you “missed the big move” has no basis in reality. If stock XYZ is up $20 you might figure you already missed the action and move on - this is a mistake. Look at the technicals. Chances are this is still a good opportunity, especially if there is relative strength against SPY.
12 - You’re not smarter than the market. You haven’t thought of something that others haven’t already considered. This type of thinking leads you to make decisions before you have technical confirmation that you’re correct. Institutional buyers have more resources and information than you, and whatever you’re thinking, they’ve considered. You can see the actions they took by looking at the charts. Your decisions should be based on the charts, not because you think NFLX will go down since the pandemic is ending. That’s not “brilliant insight”, it’s just a way to go broke.
13 - Day Traders trade what is in front of them - price action, technicals on the Daily and 5/1 minute (mainly), market conditions of that day, volume, etc. A great trade at 10am could be a terrible idea an hour later. You need to be nimble, to move quickly and to trade what you see at that moment.
14 - If you’re too anxious about any one trade your position size is too big.
15 - Don’t overtrade. Sometimes Day Trading is boring. Don’t force a trade just because you haven’t traded in awhile. Wait for the right opportunity, it will come. Last Thursday, I hadn’t traded for two hours, and then SPY started dropping. I notice BHC was still going up. I bought 5,000 shares at 33.25 and exited at 33.75. 50 cent gain for $2,500. Small example, but the point is, I waited for my moment.
There are many more tips but hopefully this list is helpful.
Also, reading through this forum I see a constant stream of bad advice. I also see a never-ending army of trolls that disrupt any worthwhile post. I know many successful Day Traders that won’t post on this forum specifically because of the trolls. Personally, I don’t care...I’m sure they’ll pop up here once again, as always. Just know that they will get ignored unless they ask a legitimate question.