• Do not expect to become an expert day trader right away. It takes considerable time, practice and effort to learn the ropes.
• Paper trade or use a simulated trading Web site to practice your trading techniques before you use your own "real" money.
• Eliminate the fear of losing because "scared" money rarely profits.
• Always limit your losses - use stop orders.
• Learn from your losses - take advantage of each loss to improve your knowledge of the market.
• Never allow large profits to turn into losses. Consider selling if the market moves against you by about 25% or so from your peak profit point.
• If the markets on a given day are not performing or reacting the way you expected, it is best to simply get out.
• Never add to a losing position. It is a prescription for disaster.
• Try to predict the general direction of a stock price but do not try to pick tops and bottoms. You will rarely succeed in accomplishing this.
• Remember that standing aside is a position and often the best one to take if you cannot form an opinion as to where the market is heading on a given day.
• The key difference between winning and losing day traders is the ability to exercise discipline to avoid mistakes or bad trading tactics.
• You must subordinate your will to the will of the market. The market is always right.
• Always keep records of your trading results and analyse the results.
• Good day traders generally sell into good news and buy on bad news.
• Patience, perseverance, determination and a rational trading plan are the key attributes of a successful day trader.
• Never get emotionally involved with your trades as emotions often work against you.
• Do not try to profit on every trade. It is the total profit you make that matters not the number of individual wins.
• Learn when you can rely on instinct as opposed to analysis.
• Don't chase momentum if you are unsure as to the exit point. Assume the market will reverse itself as soon as you open a position.
• Be flexible. Remember that different strategies suit different days and different stocks.
• Decide each day how much risk you are willing to take and stick to your decision.
• Access to timely information and fast execution of trades is essential to day trade successfully. Subscribe to a good financial information service and open an account with a Direct Access Trading firm or an online broker that caters to day traders.
• Do not try to focus on too many stocks at once. Limit your focus to a manageable number.
• Always think positive no matter how much you lose. Accept your losses gracefully, try to learn from them and move on.
• If you do not find day trading fun or find it too stressful you will not likely be successful. Try some other activity.

Questions to Ask

Are you thinking of giving day trading a try? If so, here are some preliminary questions which you need to ask yourself before starting out. The answers will begin to help you decide whether or not you are ready to take the plunge into the rather fast-paced (and risky) arena of day trading.

Why do I want to day trade?

Ask yourself why you want to day trade. Is it because you perceive day trading to be a relatively easy way to get rich quickly? Is it because several of your friends and colleagues are doing it. If so, be aware that none of these reasons are valid reasons to commence day trading. First, although one can make a lot of money day trading, it is far from easy to do so, and the risk of large losses is often there. Second, successful day traders have a true love or passion about their trading activities. If you do not enjoy reading charts, dealing with numbers, reading market news, interpreting stock quote screens, learning new trading strategies and working independently in a fast-paced environment, then day trading is probably not your cup of tea. In other words, day trade only if you think you will enjoy the challenge, and are prepared to spend considerable time to acquire the knowledge and experience necessary to become successful. Otherwise, look for something else to do.

Do I have enough capital to day trade and is this money I can risk?

Even if you get past the previous question, and conclude that day trading is something that you would truly love to try, you must ask yourself whether you have capital  on hand to effectively day trade. Although opinions differ, Rs 50,000 is about the minimum capital required. Further, this should be "100% risk capital". In other words, if you were to lose the whole of this capital, would there be any significant negative effect on your finances and would you be devastated at losing it? Day trading is an extremely risky venture, and you must be able and prepared to assume all of the risk. Can you afford to? If not, forget about day trading.

What experience/knowledge level do I have?

One of the main reasons beginning day traders fail is a lack of knowledge. Ask yourself how much trading/investing experience you have. How long have you been involved in the stock markets as a buyer/seller of shares? What do you know, and what is your knowledge level, concerning the equities markets. In particular, can you answer all of the following:

What is a bid? An ask?What is a bid size?An ask size?What is the tape? What is a market maker?What is a specialist?What is a block trade?What is a gap open? What is a tick?What is a market order? What is a limit order? What is a stop order?

Just a Start

The questions posed above are by no means all of the questions you should ask before you commence day trading. They do however provide a good start, and should help you decide if you are likely to be ready for day trading and whether day trading is for you.

This is the part of the definition of discipline of most relevance to day traders, the key word being "habit". At its simplest, in the context of day trading, discipline is the practice of making what you do a habit. As a day trader is often faced with making certain decisions, discipline implies the need to act consistently, in a reliable manner, and in accordance with the pre-determined trading strategy or system set forth in your trading plan.

Have a trading plan or system is essential to the exercise of good discipline, as it normally imposes certain parameters and sets out certain criteria which dictate how trading decisions should me made and what needs to be done in certain situations. Habitually following your plan is what is meant by the exercise of good trading discipline, which, in turn, will help you realize the best expected results possible from your plan. If you find that your trading plan or system is not meeting your expectations, despite habitually following it for a reasonable period of time, good discipline requires that you be prepared to review it and make any adjustments or fine tuning necessary for future use.

Day traders who suffer from lack of discipline often allow their emotions to rule their trading decisions, which often leads to bad decisions and unacceptable trading losses. Never allow your emotions to rule your trading. In order to day trade successfully, you must develop a trading plan (subject to any changes to it that you feel may be necessary from time to time) and consistently stick to such plan. You must avoid a "shooting from the hip" or a "seat of the pants approach" to day trading. Get out of the market when you have reached your initial objective and do not let emotions like fear and greed influence your trading decisions.

Many inexperienced traders demonstrate lack of discipline by being afraid or reluctant to take losses and to get out of a stock when it goes down, in the often vain hope that the share price will rise again. Often, however, the share price tumbles even lower, and the trader's initial small loss in the trade becomes a large one. Likewise, some day traders often get greedy if the share price rises and are reluctant to take profits off the table when their trading plan or system suggests they should. They think the share price will rise even more, and they can make even more profits. However, the share price may subsequently drop, causing their gains to dwindle or become losses. Fear or greed are two emotions that should play no role in the life of a disciplined day trader.

In short, discipline requires that you: Trade on the basis of trading plan or system and not on the basis of your hunches or emotionsTake a profit when you're supposed to in accordance with your pre-determined planTake a loss when you're supposed to in accordance with your pre-determined planDon't trade when there's no need to (over trading; trading for the sake of making a trade)  If you exercise the qualities of discipline outlined above, the likelihood of you achieving day trading success will be greatly enhanced.