Day Trading. It’s a two words, a phrase, an enticement, a mystery, a hope and an elusive career choice for many.

One of my favorite quotes is “Trading is simple but it’s not easy. It’s supposed to be relatively boring. If it’s super exciting, thrilling and causes your adrenalin to rush, you are likely doing something wrong.”

Regarding day trading equities, truer words were never spoken. Each day, there are countless opportunities. It would be impossible to take advantage of every spike, bounce, move, flush, retracement, breakout or any of the other numerous set ups.  I like to break my day trades down into some pretty simple set ups.

  1. Find a gap
  2. Make sure people are trapped
  3. Trade in the direction of the gap
  4. Follow your trading plan continuously, regarding how much you’re going to risk/lose if you are wrong.
  5. Risk less than your potential reward, always.

Really, number 2 in this list is the most subjective and takes the most practice. I try and sum this up by asking the question “if I got into this stock yesterday, would I be upset, losing money and potentially stopped out from this gap?” If my answer is yes, other people too, are going to be in the same scenario. Therefore, I will take advantage of that. Trade with the masses. If there are a lot of people trapped and selling because of a gap down, I will also be selling.

If you love visiting TraderPlanet as much as I do, hop over to my TraderTube Channel.    We’ve entitled these four videos “Everything You Need to Know About Day Trading”. I did the best job I could to condense all the basic concepts and advanced concepts into about 4 hours of exceptional content. I hope you enjoy. Come back for more next week as I’ll be sharing more specific set ups!