1. Find Your Strength. It is important that the trader determine what type of market, trending or consolidating, best suits their own personality and strength. The best traders stay focused on one or the other and master it.
2. Know Your Market. You should know your market when trading. In other words, know the levels of support/resistance; know how the instrument you trade moves with the general market; know who is likely to be on the other side and what they are thinking; and “the terrain of any market includes the “long-term charts”
3. Prepare Your Order. Know when to get into a trade and why and know when to get out of a trade and why. Just like a secret agent who will “never enter a room without knowing how to get out of it in a hurry”
4. Placing Your Order. Once you have adequately prepared for a trade, it is then necessary to be ready to place the trade when the time is right. Here “patience is the key…you must be able to wait for the market to tell you when the moment is right. Wait for the market to generate the action; don’t force it”
5. Sticking With Your Plan. This is probably the hardest part about trading. Once you enter the battlefield (enter a trade), the emotions of fear, ecstasy, greed, and sheer excitement can then take over and cause you to forget your well prepared plans for entry and exit. You must enter a “Zen-like mental state” where you remain in control of your emotions. Not doing so could spell disaster.
6. Identify When You Are Wrong. “It is crucial to your survival to identify in advance whether your view might be wrong and to determine what price level, when broken, would be in support of the consensus view; therefore, you are building up your ability to defend the occasional probes against you”
7. Holding On To Your Winning Positions. Set a trailing stop when your trade is moving in your direction thereby locking in profits while allowing the trade to work toward its maximum potential. “A trailing stop loss keeps you in the war, keeps you in tune with the war, and, most important, leaves you in full readiness to instantly strike again”
8. Focus On Your Next Trade. This is the most important step and is saved for last. This step simply says to start anew with each new trade. No matter if you won, lost, or broke even on the last trade, the next trade is a new one. “You do indeed need to be starting every single trade fresh and alert without any baggage from the previous encounter”