Day Trading Success- The Key Is Survival

Most new traders tend to focus just about all their time and energy on finding nearly perfect "setups", but trade setups, even very good ones, are *not* the key to successful trading. It's the *way* you trade your setups that keeps your losses smaller than your gains. And this is the single most essential key to trading success. To me, the process of limiting losses is more than just money management...it is survival.

I can't give you a list of mechanical survival rules that will take the place of experience and make you a successful trader overnight, but if you stick to the following principles in your trading, you'll be on track. You'll be doing just about the opposite of the crowd, and you'll eventually learn to limit your losses. Limiting your losses is the only way I know to make money in this business.

The following guidelines will sound radical, but they have guided me in making my living from trading for many years.

1. If a trade doesn't go your way within the first one to five minutes, get out. I usually get out within one or two minutes as soon as my perceived edge is gone.

2. If a trade goes against you in the first few seconds, begin drawing in your hard stop and/ or your target, trying to get out of the trade at break even.

3. Never let your hard stops get hit. When it happens, you may want to take a break and get some fresh air.

4. Hard stops are adjusted to market conditions. At the moment (July 6,2005) I am using 1.50 point hard stops on the SP futures.

5. Never move your hard stop away from your entry point, hoping that a bad trade will turn around.

6. If you find yourself *hoping* as you trade, it is a clear sign that you are not following good survival (money management) principles.

It will be impossible to put these principles together without a set of high-probability setups. Without good setups, trading is just aflip of the coin.

Mike Reed is author of TradeStalker's RBI Trader's Updates. He has been trading the Market for 23 years. When he got his start as a trader, Mike was plotting prices on paper tape as the internet had not yet been "born" as we know it today. Years of experience have really given him a feel for the Market action. His support and resistance numbers have been published on the internet since 1996. He has a wide readership that includes day traders, floor traders, locals and hedge fund managers. Mike's nightly support and resistance zones are specific and incredibly accurate. He offers an unlimited free trial of his nightly TradeStalker RBI Trader's Updates. http://www.TradeStalker.com

MORE RESOURCES:

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MCX Stock Exchange begins currency trading - Sify

RBI, Sebi to relax currency trading norms - Hindu

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China Banks Cut Currency Trading With Foreign Lenders (Update1) - Bloomberg

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Japanese Yen Likely to Gain as Currency Trading Crowds Buy USDJPY - Daily FX

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Currency Trading Signals Catch a Powerful Japanese Yen Rally ... - Daily FX

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MICEX plans to open trading as normal on Mon. - RIA Novosti

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/7-0fd=Rurl=http://en.rian.ru/business/20081010/117667286.htmlcid=1255026447ei=aq_ySNjHPJ-EyQTZ5rm7Bwusg=AFQjCNFsL_LvDl_VtuCNs9SDdFCJbq9X5QMICEX plans to open trading as normal on Mon./abrfont size=-1font color=#6f6f6fRIA Novosti,nbsp;Russianbsp;-/font nobrOct 10, 2008/nobr/fontbrfont size=-1MOSCOW, October 10 (RIA Novosti) - The Moscow Interbank Currency Exchange plans to begin trading as normal on Monday morning unless the Federal Service for b.../b/font/div/font/td/tr/table

Iceland#39;s Krona Currency Trading Halts as Kaupthing Taken Over - Bloomberg

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Forex Market Volatility Remains Elevated, Breakout Currency ... - Daily FX

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