Now that we are done with the narrative, let’s dive into the hard fast rules which work for me:

1. Only use margin once you have been able to turn a string of monthly profits for 3 straight months day trading.
2. Only use 10% of available margin on any one trade. So, if you have 250,000 cash or 1 million on margin, only use $100,000 per trade.
3. Only hold 3 trades at-a-time. This way in the above example your maximum exposure would be $300,000 dollars or 20% above your available cash.
4. Never lose more than 2% of your available cash on a trade. That would translate to a maximum loss of 2.5% on any trade.
5. Never hold a position overnight. If you are day trading, then do just that – trade during the day.
6. If you have a losing week, reduce the amount of margin by 25%