How to Avoid Losses When Day Trading the Markets

If you have been trading or practicing day trading for any significant period of time, you will know how easy it is to lose money. Clicking the wrong button, waiting too long in a trade, or the market simply “disagrees” with your prediction – all of the above and more can happen. One of the best ways to be a successful trader is to limit losses. Avoiding loss through risk mitigation, accomplished via not trading during perceived periods of high risk, is one such technique. However, we’ve covered that before. What else can you do?

Take a look at the Trade Scalper method in use by John Paul in the beginning of the video. You can see many Trade Scalper Long and Short signals. As you can see, there were multiple “sell trades” that John Paul placed. By the way, the appearance of order text near candles is controlled by the Data Series area of the chart > Plot executions > (pick your preferred setting).

So how did those sell trades come to be? Watch the replay beginning at 1:10 in the video. In short, this was a 2.25 point winner using five contracts! The profit calculation is $562.50 before any broker fees. Here’s the math: 2.25 points of profit divided by .25 (.25 is a tick) equals 9 ticks multiplied by $12.50 per tick equals $112.50 multiplied by 5 contracts equals $562.50.

When relying on trading signals, it’s often important to enter in a trade soon after the signal appears. Timing is everything. If you’re too late, the market may move against you or you can get a smaller profit, if anything. It’s important to avoid chasing the price/entries (avoiding temptation). Next, when your target is hit, exit/close the trade. Don’t be greedy. Getting out at breakeven is better than a loss. Holding a trade for too long can be problematic. Maybe you want to hold onto the trade for longer thinking price will test recent highs or lows. That’s going to be up to you and likely the rules of the trading method that you’re using.

This is why we go into great detail with our courses. We cover a variety of situations you’ll inevitably encounter. Under pressure, it’s important that you are steadfast and can rely on concrete rules. Take a look at all of our courses and software to take advantage of the great activity we’ve been seeing lately in the markets!

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