5 Rules Of Trading That Will Make You a Beast!

what's up everyone welcome back to the easterly profit youtube channel now in today's video we're going to go over the five rules that i always use in day trading to actually consistently make money so this thing is i want to break everything down where it's very simple to understand you can utilize these rules for your trading and even though it may not make more money per trade it's going to stop a lot of dumb losses that actually stop you from being profitable so let's just jump right into everything no bs always bangers on these videos let's jump right into it fifth rule that i like yeah i don't want a break i say this all the time you'll see videos from 2016 i kept on saying this don't trade within the first five minutes there's a lot of things that go into this it's a very simple rule but a lot of things psychologically work into this number one is going to be that trends and market conditions that you see in the pre-market do not aren't always going to carry over into the intraday if you look at one of the most prime examples if you look at mrin you can see that the volume on average especially if you just look at the volume average in the pre-market may seem normal but once we get into the intraday where everybody is trading everybody is taking action the volume can get completely different very very high very very volatile so essentially any type of trend you see or any type of moves you may see taking place in the pre-market doesn't always perfectly translate into the intraday and off of that um what i like to do is since i like to wait the first five minutes out you you get to develop a directional bias so directional bias what i always say is give five minutes to play out that you can really see the true nature a lot of weak hands and individuals that are willing to take profit at a moment's notice on any type of upwards move usually look to dump their shares within the first five minutes so if we look at the average of price from the opening price of the first minute to the close price of the fifth minute even though you have this very very nice spike that develops and is going to entice a lot of people to jump in after five minutes you actually have an overall negative price trend so this little tip this quickly can save you from potentially taking trades on this upswing getting caught into this trade let's say you may be in profit for a very short period of time but it can quickly turn against you and be very very dangerous to the downside very very quick tip should work like wonders rule number four never use a market order on an upswing in price so whenever price is upswing to the upsides for example you see these green candles start to move up very very quickly a lot of the sale side or the ask side of the level two likes to take advantage of upswings and people are gonna move their sell orders to higher prices if you use a market order to buy a market order buy is automatically gonna default to the near seller's price so as those sellers are constantly incrementally moving their prices up a lot of times you're gonna end up top ticking or entering at the utmost side of that candlestick and then now you're going to need a perfect transition and a perfect follow-through or if that doesn't happen you're going to instantly be in a loss one of my things is psychologically what i do is i actually train my brain to look at small red candles or small red pullbacks as proper entry points it seems counterintuitive but the strong green candle once you spot it it looks good but that's usually the worst opportunity small little red candles that pull back near the moving averages or near indicators are actually going to be more viable opportunities because now a lot of those weak hands have been shaken out of a position and then it's going to be much easier for your limit order to execute because you're not going to be chasing that that position on the upside if you have to break this down watch this over and over it's going to start to slowly make sense so when you think about spread spread is going to be the difference between the bid and the ass the nearest buyer's price that can be somebody looking to buy shares or a short sale looking to cover versus the nearest ask price or the nearest seller somebody looking to sell shares they previously bought or a short sale looking to jump their position it's all the same but at the end of the day the difference between the prices is going to add a different dynamic into the trade so spread being that difference the larger the spread the less people that are going to be in between those prices so if i want to buy this trade i have to buy from a seller i have to sell to a buyer so if i want to buy right now with the market order i'm going to enter at 336. uh if i need to sell this trade in a moment's notice i'm going to end up selling at 320. so i'm going to lose 16 cents off rip that quickly now this is usually a byproduct if you're looking at the spreads how they're widening widening up this is a byproduct of volume the more volume a company typically has you can see this only having 600 000 volume as we're into the middle of the day this is usually going to be a byproduct where you're going to have very very large spreads the larger volume companies let's say for example d-a-r-e 196 to 197 one penny per share spread very very very tight and that's going to be a byproduct of having high volume now the reason you don't want to trade these larger spreads is just there's more room for things to go wrong whenever you're using orders or for example a lot of times the chart's going to look much choppier so if we look at this company here and we move this to the charts obviously this is a warrant company so i'm not going to trade it just based off that alone but you can see that a lot of the candlesticks and the developments of this company is just going to be much more choppier by this time of the day and then it's just not a very very clear trading process if you go to dare then obviously you're going to see much more of a clear pathway of how this company is moving tighter spreads is going to equal a cleaner chart and you're gonna have more precise injuries and exits so only trade within a one percent margin so if a company is ten dollars per share only use ten cents worth of margin anything more than that off limits if it's a dollar thirty use one to two pennies at most other than that it's not really worth it uh changing that's how you get to become very precise in which you develop on a watch list so rule number two this is a rule that i always talk about you can see older videos i have this talking about this as well is trade the windows so the windows are going to be areas or like times of the day where there's more activity so think about it the more activity that's going on higher volume lower spreads equals a better trading environment and also where there is more people a lot of times there's going to be more inexperienced people that cause prices to run up to ungodly amounts so a lot of those huge bull runs and huge dumps and crashes that you can profit from whenever you're short selling or large runs that you could probably from whenever you're going long a lot of these happen in very localized areas so the obvious one is and there's going to be three windows the obvious one is going to be the first hour of the day the first hour of the day typically you're going to see the majority of the most amount of volume most people aren't going to be full-time day traders so what do they do they have a job so usually before work or usually they will block out so a little part of their schedule so they can trade the open or trade within the first hour of the day a lot of people can do that now most full-time traders truthfully even me i'm not sitting at my computer from 8 30 all the way to three i'm usually taking breaks in between doing running errors and things like that so within the first hour i will take my time and look at positions and a lot of my activity will localize in this area the second window is midday usually midday for me i usually call it right around 12 to 1. so between 12 to 1 you're going to have sometimes another perk up in volume you can see here happened a little bit earlier so there's a little bit of a window between midday midday is a little bit more it's not really solidified as a perfect time frame but usually once i get past the first hour i'll take between a 30 minute and an hour break and then i'll come back to see whatever is developing usually during that period and the third window is going to be power hour or the last hour of the day so the last hour is going to be rampant with a lot of people looking to take positions on trades to potentially swing into the next day or looking to close out positions before it reaches reaches the weekend or like especially what you're going to see is on fridays on fridays you're going to see a lot of people dumping shares indiscriminately at before the end of the uh end the the market uh and the main reason for that is you have a two day weekend those two days news can come out that you can't react to so imagine over saturdays and sundays ceos are doing their thing they're they're talking to people doing things like that making deals happen and then once monday comes along boom that news report is going to drop so a lot of people don't like that limbo status so they will dump shares before friday and re-enter and there's other things that happens with options and and spreads and things like that there's a more complicated answer to that i just i mean for the sake of time i just don't average down don't double down on a losing position now i only like to trade in blocks i like to trade solid position a thousand shares 1500 2 000 10. whatever i'm buying initially and then either i'm selling that full amount or if we are in a very rapid upswing in price is just running and running i will incrementally take profit on the upswing the problem with averaging down is you're trying to turn bad analysis or bad trade into still a profitable you're trying to force too many things so for example let's say you broke your rules or the rules that i said here and you just buy out of the gate and just starts to dump at a certain point you may think okay i should double down i should buy the same amount of shares i bought previously so my average is pushed down so if you double down here you buy another thousand shares at this point your break even level is going to be at this point now the problem is with a lot of human psychology and human nature even if we have the perfect scenario where if let's say you made this mistake you bought a thousand shares here you doubled down and bought a thousand shares here and this is your break-even point a lot of times when it gets to your break-even point and now your p l's are zeroed out i can guarantee you you're not going to just cut it from that point you're going to look to potentially have it come back up to your initial entry point and you can possibly make profit because now this is your average and now you're making profit above your average entry price a lot of time that's that's the way even though you you you may not think like that subconsciously that's what you're going to be doing and then you're going to push a trade too far and then now you're going to be double down in a position that's going to go even further to the negative side so it's one of those things that this is why stop losses are a must a stop loss should be the sixth rule that i have here always use stop losses and base your stop losses off of any type of defined points either being like the view app i use stop losses at vlab i use stop losses at the opening price i use stop losses at psychological levels like whole numbers so all that said the problem with double doubling down is even though you can make back that loss in those very short term increments the majority of the time making back that loss isn't enough you're going to try to turn it into a profitable opportunity and it normally doesn't work out and then now you're going to be double sized into a position that's going to keep on losing and lose even more than by you just taking your stop loss so hope these rules really help these are the ones you need to implement so even though you may have a strategy that is different from mine if you want to see some of my strategies look at my older videos i have that six figure strategy i have uh the swing trading strategy you've seen some of this stuff is already working i show my p l's and things here and there if you if you need information just let me know just message me so hope you guys enjoyed today's video now just for me to reiterate number one don't trade within the first five minutes number two no market orders on the upswings of price number three only trade within a one percent margin of spread don't have those blown out spreads and trade those stocks are crappy horrible companies number four trade the windows first hour midday the last hour those little windows always have the most amount of volume and number five don't average down don't turn the loser into a bigger loser if you guys need any more help you always know where to find me hit up the website i'm always here i'm always available to your disposal so let's jump into it let's make some money this summer guys let's do it

Channel: EatSleepProfit

Views: 14,142

Rating: 4.9726963 out of 5

Keywords: trading, day, lifestyle, us30, nasdaq, scalping, forex, best, how, to, scan, amc, gme, live, entry, exit

Id: aUg5fsnecGE

Length: 11min 39sec (699 seconds)

Published: Wed Jul 07 2021