Day trading means opening and closing every position within one session, so you finish the day with nothing open. It works as a routine: the same preparation, the same trading window, one or two written setups, and a stopping rule for the day set well inside the daily loss limit.
What you will learn
- A day-trading routine, from preparation to the review afterwards
- Two setups to start with, written so you can follow them the same way each day
- How to set a daily stop from the CMC Funded daily loss limit
- Why you end the day flat, and how news releases fit into the routine
A routine for one session
Pick one session and trade it on every day you trade. This routine follows the US index open, at 14:30 UK time for most of the year. For the London open at 08:00, start the same steps at 06:30.
- At 13:00, check the economic calendar for the releases due during your window.
- At 13:15, mark your levels: yesterday's high, low and close, the overnight high and low, and any round number nearby.
- At 13:25, write down the day's numbers: risk per trade, daily stop and the most trades you will take.
- From 14:30 to 14:45, watch the open and mark the range.
- From 14:45 to 16:30, take only your written setups.
- At 16:30, close anything still open and take no new trades.
- Afterwards, record each trade in your trading journal, and note the setups you skipped.
For two or three weeks in March and one week around the end of October, the UK and the US are four hours apart and the US open is at 13:30 UK time. The trading sessions lesson gives the dates.
The minimum is 3 trading days in each Classic phase and 3 on Direct, so a day trader usually meets it in the first week. Neither route has a time limit. When no setup appears, a day with no trades costs nothing.
Two setups to start with
Keep to one or two setups, and write each one down with its entry, stop, target and time exit so you can check every trade against it.
The first is the opening range breakout. You mark the high and low of the first 15 minutes after the open, place a buy stop just above the high and a sell stop just below the low, and put the stop-loss back inside the range.
The second is a pullback to the broken level. After price leaves the range, wait for it to come back and test the level it broke. Say a US index CFD breaks above a range high of 6,634.0, rises to 6,652.0, dips back to 6,633.0, then closes a 5-minute candle at 6,644.0. You buy at 6,644.0 with the stop at 6,632.0, 1 point below the pullback low and 12 points from your entry. The target is 2R, twice the risk, so 24 points away at 6,668.0. These prices are illustrations.
Both setups rest on the ideas in the support and resistance lesson.
Set a daily stop inside the daily loss limit
Your daily stop is the loss at which you finish for the day. Set it in dollars, well inside the daily loss limit, before the first trade.
Take a $25,000 Classic account. The daily loss limit is 5% of your equity at the start of the day, which is $1,250 on the first day, measured on equity. You risk 0.5% a trade, which is $125.
- To keep the sums simple, the index CFD is assumed to be worth $1 a point for each unit. On CMC Funded a lot of most index CFDs is worth less, such as $0.50 a point on US500cash, so size from your symbol's own point value. At $1 a point, a 12-point stop allows $125 ÷ 12 = 10.4 units, rounded down to 10. Your risk is 10 × 12 = $120.
- Set the daily stop at three full losses: 3 × $120 = $360, which is 28.8% of the limit.
- Cap the day at four trades, whatever the results.
On a $25,000 Direct account the daily limit is 4%, which is $1,000 on the first day, and the same $360 stop uses 36% of it.
Measure your daily stop the way the account measures the limit, on equity. If two closed trades have lost $240 and a third is open and $100 down, you are $340 down for the day. Manage that open trade and take no new one.
The limit is worked out again each day from your equity at the start of it, so it is smaller after a losing day. Keep your daily stop in fixed dollars, and check each morning that it still sits well inside that day's limit. Reaching the limit ends the account, with no warning stage.
The maximum loss can leave you even less room. On a $25,000 Direct account the floor sits at $23,500 and never moves. If a bad week leaves your equity at $23,850, only $350 separates you from the floor, which is less than your $360 daily stop. Cut your risk to about half, $60 a trade (5 units on the 12-point stop), and set the daily stop at two losses, $120. The daily loss and maximum loss lesson shows how to work out each day's room.
End the day flat
A day trader closes every position before the session ends. Holding overnight is allowed on CMC Funded, with holding costs, but your setups, stops and sizes were built for one session's movement. A 12-point stop sized for an afternoon was never meant to sit through an overnight gap.
The usual mistake is to keep a losing day trade open overnight in the hope it comes back. That turns a planned $120 loss into a loss with no fixed size, and any further loss counts against the daily limit on the day it happens. The 16:30 step in the routine prevents it.
Fit news releases into the routine
News trading is allowed on CMC Funded. Many US releases come out at 08:30 New York time, 13:30 UK time for most of the year, before this routine's window opens. Some come out at 10:00 New York time, 15:00 UK time, inside your window.
In the seconds after a release, spreads widen and a stop can fill well past its level. Decide in advance whether you close before such a release or wait 15 minutes after it before your next trade, and write that choice into your trading plan.
Check your understanding
On a $50,000 Classic account you risk 0.5% a trade and set your daily stop at three full losses. What is the stop, and what share of the daily loss limit does it use?
0.5% of $50,000 is $250, so three losses come to $750. The daily limit is $2,500, so the stop uses 30% of it.
You are $240 down on closed trades and an open trade shows $130 against you. Your daily stop is $360. Can you take another trade?
No. On equity you are $370 down, past your $360 stop, so you manage the open trade and take nothing new.
Why does a day trader close everything before the session ends?
The setups, stops and sizes were built for one session's movement. Held overnight, a position faces gaps and holding costs that the plan never allowed for.
Key points
- Trade one session with a fixed routine: calendar, levels, the day's numbers, the trading window and a review.
- Write down one or two setups with an exact entry, stop, target and time exit.
- Set a daily stop in dollars inside the daily loss limit, and measure it on equity.
- When the maximum loss floor is nearer than your daily stop, cut your risk to fit.
- Close everything before the session ends, and decide in advance how you handle releases.
Next lesson: Plan swing trades around holding costs and weekend gaps
All trading is simulated. Rewards are based on performance and are not guaranteed.