These rules are key to avoiding blowing up my trading account. I try to keep them as simple as possible. Having an accountability partner is important for me for several reasons. My spouse is my accountability partner and talking with her about the process at the end of each trading session helps me to focus on the importance of following the rules. It also serves as a reminder of why I am trading and who I am doing it for.
The rules focus on risk management and process.
Trading rules
- Always trade with a stop loss
- Risk can never exceed 2% of the account balance
- Never expand the stop loss! Only minimize
- All trades are closed by the end of the trading day
- Report daily to spouse if the rules have been followed
Additional rules after seeing a period of bad performance and equity drawdown of 22%:
- Only long when RSI on 5 min chart is above 50
- Only short when RSI on 5 min chart is below 50
- Maximum risk per trade is now 1% of the account balance
Comments
9 responses to “Trading rules for day trading”
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