RULE 1 – Keep losses small. I am more concerned about protecting my capital and ensuring any losses are small, than I am about making money. I’m going to have losses, but I control them and let the winners take care of themselves. The hardest job of any trader is to get out of a losing trade, believe it.
RULE 2 – Do not forget Rule 1.
RULE 4 – Position size every bet in relation to your bank.
RULE 5 – Always use stops, not as a trading tool, but as a disaster avoidance technique.
RULE 6 – Give your trade room to breathe, don’t place stops too close, most beginners lose because of this. Remember, the wider the stop the smaller the trade size. This is also dependent on the timeframe you are in, simple tip if you are trading on the 5 min. chart. Check the 10 min one as well. Stops should be placed visually in my opinion.
RULE 7 – Don’t be greedy, appreciate small and consistent gains. Once you’re in a profitable position, consider moving your stops – especially to break even – and then you are using the broker’s money. If your software has the facility, then trailing stops could the answer.
RULE 8 – Accept that the markets are totally random and unpredictable and practice makes perfect – give yourself time before trading ‘live’.
RULE 9 – Control REVENGE, after a loser take a break, always. Never strike right back, never, and never double up to recover your losses.
RULE 10 – Never HOPE that you will win, trade only when you see a good trading opportunity, and remember live trading is different mentally from demo trading.
RULE 11 – Keep accurate records of each and every trade, winners and losers, even on a demo account, you must learn the correct habits.
RULE 12 – Eliminate fear, fear of failure and fear of trading. If you suffer from fear then trading is not for you.
RULE 13 – You do not have to trade, if there are no good trading opportunities then do not trade, there is always tomorrow. You can always spend the time practicing new techniques on a demo account.
RULE 14 – Take full responsibility 100% for your own trading – only you can win at trading, do not rely on any external crutch to blame.
RULE 15 – All markets are bearish, they will eventually reverse, prepare and profit from them.
RULE 16 – If you lose, bet smaller. If you win, bet bigger.
RULE 17 – Only bet with money you can afford to lose; this eliminates fear.
RULE 18 – Don’t buy or take tips. Don’t buy, listen to, or be influenced by outside sources. You are not a trader unless you learn to do it yourself; it’s so easy to blame others when things go wrong! RULE 19 – Don’t trade the news. As a beginner, if you try to prejudge the market’s reaction to the news, you will lose; don’t trade for 15 minutes either side of it. See how the markets react to the news and then trade.
RULE 20 – Have faith in your trades. Once you place a trade with stops, switch the computer off, they all have an “off” button, take the dog for a walk. Do not screen watch, it will scramble your brains.
RULE 21 – Learn and use effective money management; money management is the front door key to profitable trading.
RULE 22 – Always trade with the trend.
RULE 23 – Analyse your trading results, daily, weekly, monthly and annually.
RULE 24 – Be disciplined, stick to your Trading Plan, Targets, Position Sizing, Money Management, only YOU can enforce discipline on yourself – you had better learn to do it.
RULE 25 – Use multiple timeframes; keep the bigger picture in your head.
RULE 26 – Add to your winners. If you are on a winning trend, lock in some profits by moving your stop and increase your position size.
RULE 27 – Do not overtrade, it is the main reason that men go bald!
RULE 29 – Have a trading plan. It’s important, a must, essential, life saving, lifeline; you cannot win without one. Do not be fooled into thinking you can trade without one.
RULE 30 – Have an experienced mentor who you can turn to when things go wrong, or find yourself an experienced trading buddy. Do not expect to get a mentor for free.
RULE 31 – Do not – under any circumstances – let trading dominate your life. Take regular time out for family and friends, go and play football in the park or on the beach; it’s the real reason why you are trading. Think about it!
RULE 32 – Don’t blame yourself when things go wrong. Trades will go wrong – learn to accept them. Trading is a game of possibilities and probabilities – forget the last one – get the correct setup for the next one and have faith in your interpretation.
RULE 33 – Learn your own weaknesses, the best critic of yourself is you, concentrate in rectifying them. But first, you have to admit to them; and you will know.
RULE 34 – Aim for consistency. One of the keys of successful trading is to repeat good habits time and time again, boring but profitable.
RULE 35 – Take trading seriously. It’s not something that you can say ‘you’ll give it a try’ or ‘have a go’ at. It is a proper business, treat it as such, or it’ll be a case of goodbye loser!
RULE 36 – Understand the different styles of trading and practice each one for a while. Once you are happy with a style that suits you, practice it until you perfect it, it may be day trading, swing trading, scalping or longer term trading. They are all there for you, but ultimately you must decide.
RULE 37 – Don’t listen to hype, this industry is full of the biggest and best conmen in the business, if it sounds too good to be true, then stay clear and do not part with any money on dubious trading systems or advice. I’ve seen trading systems for $50,000 and more – quite simply they do not work. If they did, we would all have them. You can check out many conmen and crooked brokers at Forexpeacearmy on the internet.
RULE 38 – Keep accurate and honest records, I know I’ve said that before but I want you to do it. Good traders are good record keepers, poor traders are the opposite. And finally, enjoy trading! It is a life changer for those that can trade within these rules. If you want to add rules of your own to this list – feel free. The last rule of trading is
RULE 39 – Don’t forget rule number one.