If you’re reading this, you clearly have an interest in day trading options.
But you may also be intimidated by certain aspects. After all, 90% of people who try day trading fail miserably.
I can’t promise you won’t fail, but I can teach you the steps that helped me avoid disaster (lessons that took me over a decade to learn).
The stock market can be frightening. If you don’t stay focused and stick to your plan, you could make bad trades or lose money.
Yes, but there’s more to it than this…
On the contrary, if you develop a repeatable strategy that suits you, day trading can potentially change your life. Just look at the accomplishments of some of my top students for clear evidence of this.
With that in mind, keep reading and I’ll tell you everything you need to know about day trading…
Why I Love Day Trading
Day trading — when you buy and sell a stock or option in a single trading day — is the bread and butter of my trading strategy.
While swing traders and long-term investors can hold stocks for weeks, months, or years … I’m in and out of my positions quickly. Sometimes in minutes. And often multiple times per day.
I prefer day trading for a variety of reasons…
I sleep better knowing I’m not holding positions overnight, I avoid getting trapped in hold-and-hope swing trades, and I’m able to benefit from the enormous potential upside on weekly options if I’m correct.
However, everything in the stock market is a double-edged sword. And with great potential reward comes major risk as well…
WARNING: Weekly options contracts can drop 30%-50% in minutes! It’s up to you to figure out the risk/reward relationship that works with your strategy.
But enough about me. Let’s talk about how you can start day trading the right way…
The PDT Rule
When you start day trading, there are a few important factors to consider…
The first is your account size. If it’s not above $25,000, you’ll be subject to the Pattern Day Trader (PDT) rule.
The PDT rule states that anyone designated a “pattern day trader” must maintain a minimum account balance of $25,000.
If your account drops below $25,000, you’ll be limited to three trades every five trading days. This is a big inhibitor for day trading, but it’s not all negative…
Want Daily Trade Ideas From Millionaire Traders?
CAUTION: The PDT rule applies to stock and options alike!
While reaching $25,000 may sound like a huge mountain to climb with a small account, I actually think the PDT rule is a positive thing for most newbies…
It will force you to focus on five-star setups and keep you from overtrading.
Another good step to take when you start day trading is paper trading.
Simulated trading allows you to test out strategies, patterns, and setups without risking a dime.
Think about how pilots use flight simulators.
Would you get on a plane flown by some guy who hadn’t practiced for thousands of hours beforehand? I hope not.
Well, you should treat your trading account the same way.
Paper trade to get solid practice under your belt before you go risking your hard-earned money on untested strategies!
Then, once you start actively day trading your own money, consider the following tips to potentially help you succeed…
Cut Losses Quickly
I say this over and over again for a very good reason.
Cutting losses quickly is the absolute most important rule when day trading.
If Tim Sykes hadn’t instilled this idea into my head years ago, I’d be lost.
Best Setups Only!
One of the biggest errors I see newbies make is trading subpar setups. They aren’t selective enough with their trades.
It’s better to miss a win than take a loss, especially when you’re first starting. Don’t feel like you need to trade every setup you come across.
Build a system for selecting your trades and stick to it.
Timing is Everything
As a day trader, your timing must be perfect.
If you miss the perfect entry on a swing trade by a couple of days, it’s not gonna make or break your position.
But if you miss a day trade entry by mere seconds, your entire play could go up in flames.
Day trading isn’t easy. If it was, everyone would do it. It takes hard work and a ton of studying to succeed.
But if you learn the points I laid out today, you’ll already be ahead of the pack…
Ultimately, your path in trading is completely up to you. How will you take it?