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 a flip 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

In The News:


pen paper and inkwell


cat break through


Forex Broker Involvement Optional

To trade on the forex market, the largest financial market... Read More

Forex Profits

The Forex Market-What, When and Why?Forex, FX and the Forex... Read More

FOREX 101: Make Money with Currency Trading

For those unfamiliar with the term, FOREX (FOReign EXchange market),... Read More

The Secret of Reduced Margin Spreads

One of the best kept secrets in trading is that... Read More

Why Demo Account Performance Is Often Better Than Real Account Performance

Over the past several years, the popularity of online currency... Read More

Writing A Trading Plan

All professional traders have a trading plan. Trading futures is... Read More

Day Trading Success- The Key Is Survival

Most new traders tend to focus just about all their... Read More

Where is the Market Going?

If you ask me whether the market will have moved... Read More

Day Trading the Index Futures - How to Judge Good Entries

QUESTION: If the SP futures fall through support and go... Read More

How Currencies are Traded in the FOREX Market

Currencies are traded in dollar amounts called "lots". At 100:1... Read More

A Look at Forex Market Makers

The investor in the currency market takes for granted that... Read More

The Secrets of the Super-Traders

The first and perhaps most important "secret" is to realize... Read More

Psychology Of Trading

The psychological aspect of trading is usually underestimated by those... Read More

FOREX Trading Philosophy

Keen on starting FOREX trading? Why would you not be?... Read More

Stock Market Report: Day Trading or Swing Trading Online? Stock Investing Information

Profitable day traders recognize that momentum trading is among the... Read More

Forex Broker

A broker is any person or firm that charges a... Read More

Is The U.S. Dollar About To Reverse Course?

For the first time in several years the U.S. dollar... Read More

Trade Entry Techniques

Most traders tend to concentrate on pinpointing the perfect entry... Read More

A Short Introduction To FOREX

FOREX is the world's largest and most liquid trading market.... Read More

Be a Smarter FOREX Currency Trader: Three Basic Principles

Below I will describe three basic principles that may come... Read More

Types of Foreign Currency Hedging Vehicles

The following are some of the most common types of... Read More

Forex2u Forex Strategy On Successful Forex Trading

The essence of the FX2u Forex strategy is that it... Read More

Advantages of Trading FOREX Over Stocks and Commodities

There are many advantages to Trading FOREX as your main... Read More

Forex Trading Can Be Like Day-trading

Forex trading, or foreign currency trading, has become a bit... Read More

Stopping Yourself

I read on a bulletin board a traders comment that... Read More

Factors Influencing a Currency Pair Exchange Rate

IntroductionThe exchange rate refers to the value of the US... Read More

A Beginner?s Guide to FOREX

FOREX is the abbreviation for the Foreign Exchange market. FOREX... Read More

The Yin and the Yang of Markets

I am reading a fantastic book on trading, first published... Read More

Trading Timeframes

Long TermLong term traders will work from end of day... Read More

5 Questions You Need To Have Answered Before You Back-Test Your Forex System

As 90-95% of new forex traders lose money within the... Read More

Creativity in Trading

"Is it important to be creative in your trading?"I'm not... Read More

Business and the Forex

The business world is a complex web of supply and... Read More

Online Futures Trading - Advantages and Disadvantages

What Is Online Futures Trading?A futures contract is an agreement... Read More