How to Day Trade for a Living

Trade Management
Before explaining my strategies, it is important to know about my order entry, exit and trade
management.
It always intrigues me in the 
www.Vancouver-Traders.com
chatroom when two elite traders
select the same stock—one long and the other short. Often, by the end of the day, both are
profitable, proving that experience and trade management are more important than the stock and
the direction that traders pick.
My trade size depends on the price of the stock and on my account and risk management rule
(Chapter 3), but 800 shares is my usual size.
1. I buy 800 shares all at once.
2. I sell 400 shares in the first target, bringing my stop loss to break-even (entry point).
3. I sell another 200 shares in the next target point.
4. I usually keep the last 200 shares until I am stopped out. I always retain some shares in
case the prices keep moving in my favor.
Some professional traders never enter the trade all at once. They scale into the trade, meaning
they buy at various points. They might start with 100 shares and then add to their position in
various steps. For example, for a 1000-share trade, they enter either 500/500 or 100/200/700
shares. If done correctly, this is an excellent method of risk and trade management. However,
managing the position in this system is extremely difficult. Many new traders who are trying to
do this will end up over-trading and will lose their money in commissions, slippage and
averaging down the losing trades.
I rarely scale into a trade but at times I will, especially in very highly volume traded stocks. But
remember, scaling into a trade is a double-edged sword and beginners may use it incorrectly as
a way to average down their losing positions, sending good money after bad. I don’t
recommend this method for beginners. Although they can appear similar, there is a huge
difference between scaling into a trade and averaging down a losing position. For beginners,
averaging down a losing trade is a recipe for wiping out your account, especially with small
accounts that cannot stand several rounds of averaging down.

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ABCD Pattern
The ABCD Pattern is the most basic and the easiest pattern to trade, and it is an excellent choice
for beginner and intermediate traders. Although it is simple and has been known for a long time,
it still works very effectively because many traders are still trading it. As mentioned earlier, it
has a self-fulfilling prophecy effect. You should do whatever all of the other traders are doing
because a trend is your friend. A trend may very well be your only friend.
Let’s take a look at this pattern: