I finally built my day trading page. This is, of course, for educational purposes, and especially for my purposes (I like to "think out loud" while I trade).

Some important rules I follow:

• Trade in the direction of strong trends (first hour of market)
• Trade broken down trends within established ranges (when market is normalized)
• Set strict stop losses
• If profits are lost, set stop loss to break even
• 1%-1.5% stop loss (depending on pivot points)
• 1% gains are okay
• 2% are better
• 3% is awesome, but don't count on it
• 4% quit dreaming, you can't do 4% a day.
• 5% ...that was by chance, not skill.

Why the 1% stop loss? I don't know, I guess I'm a believer in probabilities and statistics. How can I put it? If you trade in the direction of the trend, the probability of you getting a 1% gain is better than getting a 1% loss. Let's say, for example the probability of you being correct is 2 out of 3. If you make 100 trades, then you'd have a cumulative gain of 66 1% gains, and 34 1% losses, or a net 32% gain. Let's improve the gain to 2%, then that's 66 x 2 = 122 - 34 = 88%. Let's improve the streak of wins to 3/4, that's 75 x 1% = 75 - 25 = 50% gain. Now improve that to 2%, that's 150 - 25 =125%.

... numbers get better. The key is discipline... that's one tough key! In this model, time is your friend. The longer you extend time, the more trades you make, and therefore as long as your winners > losers, you'll eventually grow. Again, over time your capital will grow and therefore when your principal investment grows your profits will grow.

...too many people try to day trade going after the big winners, and also pick up the big losers.