My Rules for Day Trading

I would like to formulate my set of rules for trading. These rules are rules I am finding helpful for me. Some of them I learnt from my teacher (at least in principal, not necessarily the details), some I defined for myself. Some of them may be universal, others may have only universal principles, but other people will have to adapt them to themselves. Each person has his or her personal strategies and comfort levels. I do think that most people need some set of rules to give a framework for their day trading.

I will give here a few sets of rules, separated by their themes.  I will probably continue to change and adapt them over the time, as things may become more clear or circumstances change.

Timing:

1. Do  not trade immediately after the stock exchange opens (usually 16:30 Israel time).  It is also best not to be in a position when the trading starts.  Do not enter a position between 16:15 till 16:45.
2. Do not be in a position when the market closes.  Do not enter a position after 22:45 Israel time.
3. Do not be in a position during a financial report, and wait some time after it is announced.  Do not enter a position from 15 minutes before the announcement time till 10 minutes after.
4. Do not enter a position less than 15 minutes before you have to go out for any reason (take the kids somewhere etc.)

Trading Limits

1. Give yourself limits for no. of daily positions, daily profit expectation and maximum daily loss.  When one of these limits is met, stop trading for that day.  My current limits are:  3 positions a day,  $150 profit expectation, $250 max daily loss.
2. Max. number of contracts at one time:  I set it now for 3.  That means that when I want to add a fourth contract to a posiiton in a better place, I have to get out of one contract, even if that means immediate loss.
3. Max. number of potential loss per position:  $350.  When a position is having a potential loss of $350 or more, I have to get out of at least one contract, making it an actual loss but reducing the risk of bigger loss.
4. Max. time per position:  When a position takes more than 30 minutes, it is time to try and get out of it, even if that means actual loss.

Trading Limits after Major Losses

1. After a day of major loss ($1000) I need a time of cooling:  The next day I can trade on only one contract.
2. If I lost aslo on the next day, I should take a day off from trading.  When I get back to trading I should do it gradually (one position of one contract the first day, max of two positions with one contract each the second, etc.)