5 Reasons to Step Away From a Trade

Volatile markets can send your positions into theidea to make the trade. The marginal benefit from a
negative. Indeed, bad trades frequently happen tosupport bump is not worth the risk of a trend
good traders. Regardless if you are a scalper orbreakdown. Create your own risk and money
momentum trader, the most important part to anymanagement criteria to determine when the time is
strategy is knowing when to intelligently and rationallyright to make a trade.
walk away from a trade.4. Topping Out
1. No Support or Resistance in SightTops are difficult to call until they are over.
Technical analysis is the backbone of day trading. DayUnderstanding candle sticks and candlestick chart
traders use technical analysis to find support andpatterns can make calling a top a much easier task.
resistance levels to determine where the price will goIn a market top with significant support, the price
next. Most day trading strategies are built on supportcould drop dramatically or go into a sideways trend. A
and resistance, with some heed paid to news eventssideways trend is a dangerous market because the
over the course of the day. When holding a positionups and downs eventually breakdown to send the
deep in the red, or if you are contemplating taking aprice in one direction, giving you a 50/50 probability of
position, look at the chart for support and resistanceprofitability.
lines. In an area with no support, it is likely that the5. Late in the Day
stock could go in any direction.Late day breakouts can be profitable, but holding a
2. Momentum is Against Youposition overnight can ruin your trading capital by
With a quick breakout out of an uptrend, youmarket open. Swing traders might be able to
suddenly find that the market is moving against you.weather the market open, but highly leveraged day
Upward gaps symbolize that the position has legs andtraders should avoid late-in-the-day positions. Most
will keep running. Momentum strategies usually sendtrading strategies avoid late-in-the-day trades to cut
day traders and swing traders alike to place heavyinterest costs and limit exposure to volatile market
bets in their momentum calls. Once a trend isopens. In day trading, it is always best to start your
established, traders from all around the world jumptrading day anew, limiting your risk to any overnight
on and push the market further - meaning your tradeor pre-opening bell surprises.
runs further from your profitability. When the marketThe most successful traders know how to read
gaps away from you, get out of the trade.strong trades, but equally as important, they also
3. Low Rewardknow exactly when to cut their losses or lock in their
Trading success is dependent on producing returnsgains. Developing your trading acumen means trading
and minimizing risk. When support and resistanceyour exit strategies and analysis.
levels are both within sight, it is generally not a good