What does a Winning Day Trading System look like?

A Good Day Trading System Can Help Boost Your Trading Profitability

It might seem evident that the best day trading system encourages you to buy low and sell high. Alternatively, if you are in the market shorting stocks or futures, then you need to sell them high and cover the short by securing it at a lower price. The basics of these two strategies are simple enough, however, how you achieve this goal will define you as a success or failure in day trading. The action of buying and selling stocks and futures is easy enough. Although, buying at the right price and selling for profit is much harder. Without an effective day trading strategy, many day traders just go broke.

Trade Plan

Novice traders understand the buying and selling part; they just don’t get the entering and exiting part. Any day trader new to the industry will quickly see that prices tend to jump all over, making him or her unsure of exactly when to exit. Often they choose the worst moment to exit, generating a significant loss and tremendous frustration by the process. If only they had developed a quality day trading system, they would be in the game using an efficient profit-making plan. In short, a well-developed plan should include the criteria used to determine the specific markets you would research for today’s trading. Your strategy must also include understanding the specific characteristics of the markets you wish to trade.

Trading Patterns

You must be able to recognize common patterns, programmed into your day trading software, that would help you determine exactly when to enter the trade. Additionally, you would have an effective exit strategy that is most likely based in part on your research. It would help you determine the average percentage of profitable gain you would typically expect in the trade. Your strategy would let you know what to do anytime the trade goes against you, and it would automatically set a maximum percentage loss to limit your “hit.” The plan will also help you understand if there are strategic reasons and criteria to make you consider staying in the trade overnight. A strategic trading plan empowers you with quick answers when faced with the need to make an instant decision. Once you develop your strategy, you will know how to study your trades. Working on your trading discipline will optimize your win/loss ratio. You will be aware that your plan is effective because you will start making more profits and taking fewer losses. While there are a lot of ways to day trade, setting up a scenario that is nothing more than a game of chance can quickly get you into trouble. Take the time to find and develop your effective day trading system. It is critical for your success.