Trading Rules
- The purpose– a good set of trading rules promote growth they do not create limitations. Not trading during x period of time is not a rule, it is a limitation. Do not get me wrong there are times when you need to limit yourself but that is not all times. If you have a plan, you will be able to understand when you are most at risk of trading poorly. Eventually, you can work through it. Sometimes all it takes is being aware of it.
- Simple-They need to be simple. They need to hang over and direct all of your actions. The only way you are going to remember and use them to your fullest ability is if you can understand them. Rules are more simple than limitations.
- Must apply– Rules or a trading plan are only as good as your ability to apply them. Once again, you have to believe in them, you have to make them your own.
- Cohesive- All rules needs to eventually act as one. Each rule dependent on another. This will make it easier to follow and understand which one you are breaking. This also makes the application easier.
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