Trading is inherently risky, you need to have a good set of trading tools and follow fundamental risk management principles. At DayTradingZones we suggest following nine fundamental money management rules, to keep your capital safe while going through any trading training and building your experience emini trading, trading forex or any market. These principles apply whatever daytrading systems you use for actual entries and exits.

Our 9 rules to keep you in the 10% winning club vs. 90% of traders who lose money

1. Only risk 1% of your capital per trade, then your capital can absorb 100 consecutive bad trades – Even the best systems can expect 20% losing trades, so the 1% rule gives you room to maneuver.

2. Look for high volume markets with a thin spread – this way your trading tools will give you meaningful signals since it has high volatility so there are opportunities for 2 to 4 good trades during the day and your orders are filled quickly. The E-mini S&P500 Index Future is a good example of this type of market (Each point is worth $50, split into 4 ticks of $12.50 and there are 4 contracts a year, traded on the Chicago Mercantile Exchange).

3. $10-$15k is the minimum capital you should have per E-mini S&P500 contract traded – If you lose $1000-$1500, it only represents 10% of you capital which is recoverable compared to a $3k account where the same loss equals 50% of your account. Consequently, you are more likely to lose the remainder of your capital rather than recover the loss, whatever daytrading software you are using.

4. Limit the number of trades you make per day – 2-6 is good as the E-mini usually has up to 3 trends per day and you should aim to catch 1-2 out of the 3. Make sure you use trading tools which only give you high probability trades because overtrading racks up commission fees and increases the risk of revenge trading. A few ticks loss per trade quickly mounts up – 4 trades fired like a machine gun can easily become four losers, at 8 tick stops, that’s $400 loss, 4% of a $10k account. Patience is key, stalk trades.

5. Limit the hours you trade – We prefer the first 60-90 minutes when typically there is a good trend before the lunch time chop – many professional traders trade this time period.

6. On any one day stop trading when losses hit 5-10% of capital, which is recoverable. If you have already previously proven your trading tools, days like this indicate that you are not following them, so stop, evaluate your errors and record them in your Trading Journal.

7. Base your stop loss and target strategically from the charts, not an arbitrary number of points – For example use support and resistance levels at double tops, swing highs and lows, or pull backs to your trading tools. Then you can place tighter stops and take higher profit to risk ratio trades by keeping your focus on the chart, trading what you see, not what you think or feel.

8. Keep a Trading Journal listing all your trades – Over time the mind dismisses bad trades and habits. Include annotated charts, and notes about your emotions. Key things to note: - Are you taking negligible signals because you have missed a good move, resulting in chasing a trade which you are stopped out of on a minor retrace, or you opt for a counter-trend trade purely on the thought “it can’t possibly go any higher”? - Are you trading your account and not your trading tools and the charts, taking desperate trades having made a couple of losers, rather than treating each trade uniquely?

9. Be patient between one area of support and resistance to the next – This is one of the hardest things to master. To help, trade at least 2 contracts, keeping 1 for 2-3pts, whatever your first target is, and then let a runner go with a break even stop. If it goes your way you add gravy to the first. This patience between areas and one good runner is hard to beat with lots of scalps, your results will amaze, whatever you are using for support and resistance, be it our trading tools or other technical analysis tools.

Learn more from Marc in his e-book "Revelations of a 17 Year Trading Veteran" and video training series, available at DayTradingZones.com.