MY S&P500 DAYTRADING RULES

Every year probably a million people decide to daytrade the S&P, get rich, and quit their day job. At the end of the year about 10 are probably left. Maybe that's exaggerated, but the point is - you can lose a lot of money trying to do something that most fail at. Only three things will make you different - knowledge of how the S&P behaves ( and why ), knowledge of how You work (and why), and DISCIPLINED RULES. Of these, the rules are the most important.

Here are my rules

1. Shop for a good trade setup
- that's what I use my analysis tools for

2. Trail an entry stop to get in (Trail In)
- let the market prove you right

3. Trail an entry stop to get out (Trail Out) 4. If a move stalls- CASH IT IN.

I apply these rules to both positon trading and day trading, but I have more for day trading.

For day trading in particular:

5. Cover It On Close
- CIOC - like Cash In On Chaos - Play only ONE GAME. There is no bad day trade that is a good positon trade. Carrying anything overnight is to SURRENDER CONTROL. It's like leaving your wallet on the sidewalk in front of your house overnight and hoping that someone will put money in it while you sleep.

6. Don't chase a trade
- If you didn't see it setting up, don't trade it. It's throwing late down the midddle. You already missed a zillion trades in you previous life, so why worry if you miss this one. There are more coming.

7. Trade in sets of 20 or 30 trades.
That gives you statically significant results to evaluate what you are doing. Then take a break.

8. Grade yourself on EXECUTION
- IT MUST BE PERFECT. Unlike driving a car, you can't make small errors of execution. Because if you do, the S&P will explode against you and make that small error in execution a BIG LOSS. I give myself 60 seconds to call in my protective Trail Out stop when an entry stop is hit. I make it an automatic 2 points from my entry point. If I find myself hesitating or not doing this, I take at least a week off.

9. When you trade - DO NOTHING ELSE. You won't win while talking on the phone to your favorite other soul.

Chaos Trading in a Nutshell

Think about it. The markets are chaotic. Trail In, Trail out will insure A) you catch some small losses, B) you catch some small gains, and C) you will catch some big gains - even if you pick the trades at random. The key is that YOU NEVER CATCH A BIG LOSS. Over time, this works. That is what's built my hotline track records over the years, and what built my own account. Then, technology to improve the trade selection improves the results. But I always Trail In- Trail Out. It's the only way to Cash In On Chaos.