RULE # 1:USE MONEY YOU CAN AFFORD TO LOSE
If you are trading With funds
1) You need for some family projects, you are doomed to failure.this is because you wont be able to enjoy the mental freedom to make sound trading decisions.
2)your trading funds should be viewed as money you are willing to lose. your position should be careful analysed so you don’t jeopardize other funds or assets.
3)one of the keys to successful trading is mental independance.
4)you have got to trade outside influencing factors and that means your trading freedom must not be influenced by the fear of losing money you really have earmarked for a specific need.
RULE # 2: KNOW YOURSELF
1)you need an objective temperament, an ability to control emotions and carry a position without losing sleep. Although trading discipline can be developed, the successful traders are unemotional about their positions.
2)there are many exciting things happening in the market everyday so it takes a hard nosed type of attitude and an ability to stand above short term circumstances.If you do not have this attitude you will be changing your mind and your positions every few minutes.
RULE # 3: START SMALL
1)Test your trading ability by making paper trades. then begin to trade small.start with mini account.
2) beginning traders should learn the mechanics of trading before graduating to more volatile contracts.
RULE # 4O NOT OVER COMMIT
1)One rule of thumb is to keep three times the money in your margin account than is needed for that particular position.Reduce your position if necessary to confirm to that rule.this rule helps you avoid trading decisions based on the amount of money in your margin account.
2) If you are under margined you may be forced to liquidate a position early at a costly loss that could have been avoided.
RULE # 5: ISOLATE YOUR TRADING FROM YOUR DESIRE FOR PROFIT.
1)do not hope for a move so much that your trade is based on hope. The successful trader is able to isolate his trading from his emotion. Although hope is a great virtue in other areas of life, it can be a real hindrance to a trader.
2)When hoping that the market will turn around in their favor beginners often violate basic trading rules. (more…)