I have invested in the market for over 20 years and found that my originally strategy of trying to find the next big thing or just hold onto something long-term never worked and left me with losses.
I have thought about day trading for years but was always sort of overwhelmed by the time, effort and if it would be worth it. I finally went for it 26 trading days ago.
So far it has worked out for me. I am up 41.93% in that timeframe and have about an 85/15 win/loss ratio.
I have found that most of my losses have been due to me not following my own rules.
I have traded every day with my aim to make anywhere from 1.3% to 1.5% per day and only holding a security for a short period and never holding past the close of the market.
The rules that I have set so far are:
1) Aim for the 1.3% to 1.5% per day and do not try to be greedy and think I can get more unless I am very confident in the chart.
2) Do not buy any stocks related to bitcoin, precious metals, or emerging markets.
3) Average daily volume must be over 1 million.
4) Stock price generally has to be above $5
5) I only trade stocks that I am familiar with and the chart looks positive. I generally look at the 20, 50, and 200 day moving averages, MACD, RSI and Bollinger Bands.
6) If I am not trading stocks that I am familiar with it is a stock that reported earnings or other news event. For earnings, I look for a beat on EPS and Rev as well as a raise to guidance. Or I look for a positive Phase 3 study results.
7) I only trade stocks traded on the Nasdaq or NYSE.
8) I tend to trade in the late premarket or early in the open. Often buying in the premarket if the stock is up and waiting for a dip late in the premarket. If the stock goes down at open I will continue to buy averaging down and most times it comes back and I get the 1.3% or greater. If the stock goes straight up, I sell at 1.3% or greater. But I do not hold for long, especially if the 1-day, 1 min or 5-day, 5 min chart is showing overbought or hitting the upper band on the Bollinger's.
I am nervous, because I feel like the first month+ I have done really well. I am worried that it is not sustainable and I will lose like I have in the past. I am also worried that if it does continue, at what point would an account balance become too high to maintain this? I realize more money equals more shares but at a higher share count per trade it begins to work against me. What should I be looking for or be cautious of in the future? I read that day traders usually give their gains back because they become greedy and stop following the rules that they set and that worked for them.
I am also excited at the potential this could be and I am wondering if I am getting too excited after such a short time? How long of time is needed in order to consider this sustainable? Thank you
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