Making Sense of Day Trading Order Types

Don't a let a single bad day ruin your entire month. In day trading you're going to have bad days where everything seems to go wrong.

Successful traders know how to handle such days , and know when it's time to quit--they implement a daily stop loss on themselves.

There's always another day, and it's best to preserve capital when things aren't going well, so you have it for when they are.

The day trading daily stop loss is the amount of money you allow yourself to lose in a day before you call it quits for that day. This is different than a stop loss order , which controls the risk on an individual trade.

10 rules for rookie day traders - MarketWatch

The daily stop loss forces you to realize that today likely just isn't your day, and preserving your capital for another day is the best option. Once losses start to mount it can become very tough to stay focused, and not get into "revenge trading" mode, which typically results in even bigger losses.

Depending on the method chosen for determining your daily stop loss it may fluctuate daily.

If you are new to trading and don't have a track record, your daily stop will need to be based on losing trades in a row, or a percentage loss. This is a good method because it makes sure that any losing day can be easily recouped by a positive day.

Which Order to Use? Stop-Loss or Stop-Limit Order | Investopedia

If you are a relatively consistent trader, this added buffer gives you more room to make back some money during the day, without being forced to quit trading. When you hit your established limit, stop trading. No matter which daily stop method you choose, reaching your daily stop level shouldn't be a common occurrence.

Which Order to Use? Stop-Loss or Stop-Limit Order | Investopedia

Reaching it once or twice or month is manageable, but if you are reaching it more often than that then your method may need refining, risk needs to reduced on each trade, or current market conditions are not favorable for your strategy.

The daily stop loss serves to protect you from taking a massive loss on a single day, which could potentially ruin an entire month worth of trading, or worse yet, significantly deplete your trading account.

These daily stop loss guidelines apply whether you're forex day trading , stock day trading, or day trading other markets. Search the site GO. Day Trading Basics Trading Systems Trading Psychology Trading Strategies Stock Markets Risk Management Forex Technical Indicators Options Glossary.

Updated August 09, A Day Trading Daily Stop Loss? Get Daily Money Tips to Your Inbox Email Address Sign Up.

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