Day Trading Rules and Methods
Here are Trading Rules in order of Importance.
#1.Be in All Cash. Almost always be in all cash, particularly when away from trading and overnight.
#2. Be Ready to Close all positions. Set up each to close with 1 button to push, using your Manual Stops.
Stop out on new recent lows of 1/2% of more on the stock and back in on new recent highs or bottom fish.
Trade with the market Direction if DJIA more than 0.3% move, else be in cash.
Add to the Trade, IF: When a Stock is in a consistent up-trend, Buy More Stock Options if at New Recent Highs of more than 1/% up from recent lows, recent lows above your purchase price we call a "consistent uptrend."
Widen your Stop price if Stock up over 1.5%. then use ½ or 1/3 of the Move. With Tesla up from 98.25 to $104, use $101 or 102. Once 1 hour has passed with no New Low, then New Recent Lows become your Stop, like TSLA at $102.5 might be.
Use the price of the Stock, not the Option to make decisions.
Trading: What stocks, option exercise and amounts to buy?
To Choose Stocks for day-trading of it's Options use both:
Your Own List and New 52 Week Highs:
At Barcharts.com I use new 52 week highs sorted by today's stock price change for http://ow.ly/jP7Uf
Option Exercise: Choose the price below the current price and the next 1 above if trade continues, Adding On. Example: TSLA price 98.25 use the $95 next the $100. Start with a small account using the higher exercise price first.
You have No Stops in market normally. Why? Because they get triggered by mistake unless liquid like AAPL or QQQ.
Rule #2 says be ready to close the positions by hand and Move your stop normally to a1/2% down move on Stock price, like $0.50 with Tesla at $98.25 and $2.20 with AAPL at $440.
Yes, Stops, If: If you have more than 4 active open positions like 3 of 1 stock and 1 of another then do consider using Stops, if Trade is strong.
"Your List" of stocks and ETFs to consider trading should include all the highly liquid companies and ETFs like FAS an TNA which are Ideal for Day Trading. Some of my favorites are Apple, LinkedIn, Tesla, First Solar, Goldman Sachs and Google.
Summary: Be ready to close all positions immediately to be in All Cash.