Golden rule for day traders:

1. KNOW YOUR MARKET.

The best day traders specialize on only a small number of indices, or stocks, and get to know them intimately. In this way, over time, you will naturally become attuned to the rhythm of your chosen instruments, and will come to have a 6th sense as to when you should and shouldn’t trade. Follow this rule and you will understand why you shouldn’t try day trading penny stock. •

2. Never be a gambler

Do not invest in a stock just  because someone told you it might be a good idea. Never give 100% trust on tips. Do  your own research before you invest. Pay attention to some of the stuff on Yahoo and Google Finance message boards, and provided by bloggers and investment websites, but never use this information as a substitute for doing some research yourself.

3. Stick to your Plans.

Prepare well before taking a strategy and tick to the strategy once you have picked one. If  your preparation is well  then over time, you will make money. If you chop and change, and try to jump horses midstream, you will, on the other hand, most likely fail, and quickly. Don’t let you emotions take decisions for you. •

4. Buy when others are selling and sell when others are buying:

People who earned money in the market always think different . They buy when everyone else  sell and sell  when everyone else buy. They never followed the herd. They followed their own path. But what made them successful was not only being contrarian but also being right. Be fearful when others are greedy, and greedy when others are fearful’ is a maxim made famous by Warren Buffett.

5. Don’t get addicted to a  stock

If a stock is not behaving as you thought it would, go back and try to examine why. If you uncover new information which is impacting its behaviour  do not hesitate to cut some, or all, of your position. Have a strict downside risk position policy, and sell if the stock price falls to your exit point.