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If your trading system produces five trades per week, then you have on average 20 trades per month. Having a winning percentage of 70% - your chances of a winning month are extremely high. And that's the goal of all traders: Having as many winning months as possible!

Principle #6: Start small - grow big.

Your daytrading system should allow you to start small and grow big. A good trading system allows you to start with one or two contracts, and then increases your position as your trading account grows. This is in contrast to many "martingale" trading systems that require increasing position sizes when you are in a losing streak.

You probably heard about this strategy: Double your contracts every time you lose, and one winner will win back all the money you previously lost. It's not unusual to have 4-5 losing trades in a row, and this would already require to trade 16 contracts after just 4 losses! Trading the e-mini S&P you would then need an account size of at least $63,200, just to meet the margin requirement. That's why martingale systems don't work.

Principle #7: Automate your trading.

Emotions and human errors are the most common mistakes that traders make. By all means you have to avoid these mistakes. Especially during fast markets, it is crucial that you determine the entry and exit points fast and accurately; otherwise, you might miss a trade or find yourself in a losing position. Therefore you should automate your trading and look for a trading system that either already is or can be automated. Automating your trading makes it free of human emotion. The buy and sell operations are all automatic, hands-free, with no manual interventions and you can be sure that you make profits when you should according to your plan.

• Principle #8: Have a high percentage of winning trades. Your daytrading strategy should produce more than 50% winners. There's no doubt that daytrading systems with smaller winning percentages can be profitable, too, but the psychological pressure is enormous. Taking 7 losers out of 10 trades and not doubting the system takes great discipline, and many traders can't stand the pressure. After the sixth loser they start "improving" the system or stop trading it completely.
• Especially for beginners it is a big help to gain confidence in your trading and your system if you have a high winning percentage of more than 65%.
• Principle #9: Look for a trading system that is tested on at least 200 trades.

The more trades you use in your back testing (without curve-fitting), the higher the probabilities that your day trading system will succeed in the future. Look at the following table:

Number of Trades 50 100 200 300 500 Margin of Error 14% 10% 7% 6% 4%

• The more trades you have in your back testing, the smaller the margin of error, and the higher the probability of producing profits in the future.
• Principle #10: Chose a valid back testing period.

I recently saw the following ad: "Since 1994 I've taught thousands of traders worldwide a Simple and Reliable E-Mini trading methodology".