If you’re trying to improve your day trading, it’s easy to obsess over entries. The bigger problem for most traders isn’t finding a setup. It’s understanding the risk behind it.
My process starts before the open. I mark the important support and resistance levels and build trade plans around them: where I want to go long or short, where the trade is invalid, and where I plan to take profits. Once the market opens, I don’t want to invent trades. The work should already be done. My job is to wait for price to reach those areas and execute the plan.
That process produced two straightforward trades today.
The first was only five contracts—very small compared with my usual size. Price moved into the planned short area, and I targeted the first level where the market could reasonably bounce. The trade lasted about four minutes and made roughly $124. The dollar amount wasn’t the point. The trade had a clear entry, a logical target, and controlled risk. I didn’t need the entire move. I took the portion that matched the plan.
The next trade developed on QQQ. The first long level worked, and several areas below it helped define the structure. I entered, added in a controlled way, and paid myself as price moved in my favor. That trade produced about $1,024 over roughly 10 to 12 minutes.
The main lesson is simple: a technical level is not automatically a tradable level.
There was another level on QQQ that many traders may have treated as an obvious long because it had support from the previous close. On its own it looked valid. But there were additional support areas below it—the 20 SMA, Friday’s low of day, and nearby moving averages. That created a problem. If you entered at the first level, where did the stop go? Tight under that level and you could get stopped before price reached the next important support. Under all of those levels and the trade required much more risk.
You cannot look at one level in isolation. A previous close, high of day, gap fill, or moving average can all be meaningful without creating a good entry. The better questions are where the trade actually makes sense, where it is invalid, whether the distance to invalidation is reasonable, and whether the potential reward justifies the risk.
Many inexperienced traders say they’ll just put the stop a little below the level. That is not a complete risk plan. Risk has to be based on the technical structure of the trade. If the market needs to move through multiple areas before the setup is truly invalidated, you have to account for those areas. If that makes the trade too wide, the correct decision may be to skip it.
There is nothing wrong with passing on a trade that does not offer acceptable risk. That is part of professional trading.
You do not need an oversized position or a massive move to trade well. Today’s examples show that small size can still produce meaningful results when the plan is clear and the trade is managed properly. Identify the level. Define the risk. Enter only when the setup appears. Take profits at a logical target. Don’t force it.
Professional trading is not about being right on every trade. It is about staying inside a framework where your decisions make sense: prepare before the open, choose trades with acceptable risk, avoid setups where nearby levels make the stop unclear, and take profits at logical targets.
If you take one thing from today’s recap, let it be this: a trade is only good if the risk is good. Everything else comes after.
Thanks Pat!