50 Rules for Successful In Future Trading

1. Always Trade with a Plan
Many times I have seen traders selling or buying without a
trading plan. They sell or buy just because they think the
market is going up or down. Trading is a hard work and you
have to wait for the right moment to enter a position.

2. Don't let your emotions rule your trading decisions
When trading don't let your emotional stress press you to
abandon your plan and discipline rules. When you follow
your trading plan consistently and you stick to it, you
will be profitable.

3. Cut your losses and let your profits run
Most traders have the tendency to do the opposite. Nobody
likes to be wrong. But when you speculate, you have to
recognize that wrong trades are part of the business.
A novice trader won't cut his losses early, he hates to be
wrong and often will let his losses ride, and then he will
be praying for smaller losses. He already forgot about the
profit. Most of us want to take the profit right away
especially after having lost. If you lose $1,000 in a trade
and you win $100 you are going to lose all your money. Place
a stop in case you are wrong and a protective stop to pocket
a profit, but let your winning trades run.

4. If you cannot afford to lose, don't trade
Loses are part of the trading business. If you cannot
afford losses, financially or psychologically, don't trade.
Many traders don't have an account with enough funds to hold
a few consecutive losing trades; they are under-capitalized.
Trading should be done with funds that are not necessary
for your daily expenses.

5. Trade the market, not the money
Concentrate on trade entry and exit; forget that you are
trading money and keep a close eye on the beauty of a nice
trade, don't place stops for your losing trades based on a
fixed amount of money. Place your stops when the market
lets you know that you are wrong.

6. Don't overstay a trade
From the moment I place a trade, I give 5-10 minutes for
the trade to move in my favor. If price doesn't cooperate
within this time period, some aspect of the trade may be
wrong. My approach when this occurs is to reduce the size
and bring my protective stop closer.

7. Never add to a losing position
A loss is difficult to accept, but adding to a losing
position to average a price does not make sense. If you are
not right in the first trade decision, why should you be
right in an added position? I have seen many traders finish
their career as soon as they started by trying to be right
on their second choice. If you are losing, close your trade
and look for another opportunity.

8. Don't answer a margin call
Being on a margin call means that you let your position run
against you without placing a protective stop loss order. If
you want to survive in this business you have to admit that
very often you are wrong and you have to take a loss. A
margin call is the last warning before a disaster.

9. Don't let a winning trade turn into a loser
I have seen many times when people are just afraid to take
a profit or they miscalculate the possibilities of the
trade and think that every trade should be a home run. When
you are in a profitable trade, let it run by trailing your
protective stop.

10. Always trade with a stop
If you want to preserve your capital this is the most
important rule that you should apply. You never know what
the market is going to make, you never know the extension
of the next move, don't lose all your money in one trade.
If you cut your losses you will have the chance to be right
on your next trading decision.

11. Don't lose your discipline after a winning streak
Many traders have the tendency to abandon their systematic,
fundamental approach to the market once they find themselves
with a few winning trades, and they become undisciplined and
imprudent.

12. Look for balance between the size of your position and
the size of your account
Don't get fooled by "intraday low margins" that many
brokers offer; you will probably lose all your trading
funds if you open a big position with too little capital,
unless your trading style is to bet all your money in one
shot (that won't help you, in the end you will have an
empty trading account).

13. Don't trade too many markets
It is difficult to successfully trade and understand a
specific market. It is next to impossible for an
individual, especially a beginner, to be successful in
several markets at the same time.

14. Don't trade in a market that has a low volume (too
thin)
A lack of participation in a market makes it difficult to
fill your expected price and more difficult to offset a
position at a fair price.

15. Don't stick to a position that makes you feel
uncomfortable
If you are in a trade feeling unsure about your position or
its possibilities to be profitable, you will be influenced
by many external details or "noise" and probably will
take a loss; close this unpleasant trade at the moment the
market gives you the opportunity; stop believing in those
who says "no pain, no gain".

16. Don't expect to be right all the time
In trading, it would be folly to expect to be right every
time. A trader with proper techniques should be able to cut
his losses short and let his profits run so that even being
right less than half the time will show excellent profits.

17. Be flexible, try to adapt your position to the market
direction
Markets go up, and markets go down, adapt to market
tendencies. An intelligent trader starts the day with a
plan, but price behavior dictates at the end how the market
is moving. Don't stick to a bias, change your point of
view with the markets.

18. Eliminate anxiety
Eliminate anxiety before a trade to avoid losses or secure
profits. Wait for the right moment to go into a position;
nothing happens if you miss the trade, the day trading
business offers a few different trading set ups during most
sessions.

19. Avoid market orders when you are placing an entry order
It is very difficult and uncommon to buy low; it is unusual
to sell high. When you go into a trade, always place your
order a few ticks below or above the current price, 99% of
your entries could be at a better price.

20. Go to the market if you want to close a losing trade
If you don't have a stop order and you are losing money
in a trade that is running against you, get out as soon as
possible, even before your hard stop order takes effect.

21. Keep calm after winning or losing
You already closed a trade, sometimes with profit,
sometimes with losses. A little bit of self-examination
will help you with your next trading decision.

22. Stay physically and mentally fit
If you are tired or feeling bad, a stomach pain or with
fever, you won't be in your best conditions to trade. If
your wife or girlfriend just broke up with you and you are
depressed, take the day off. Remember that tomorrow markets
will reopen.

23. Define how and where to exit from a losing trade
Many traders go into a position and only later decide when
to cut a bad trade. At the same moment that you enter a
position, you have to decide at which point to exit.

24. Set realistic goals in every trade
Not every market and trade have the same profit potential.
Remember that most of the time markets move sideways, and
only a few times a month we have a trend day. Don't
expect to make thousands of dollars on every trade.

25. You should be right 40% of the time and still show
profits
Most professional traders understand that to expect to be
right all the time is folly. An individual with proper
trading techniques should be able to cut losses short and
let profits run so that even being right less than half the
time will show excellent profits.

26. Be aware of the trend
It is important for a trader to be aware of a strong force
in the market, either bullish or bearish. When this force
is in full effect, it would be folly to buck it. However,
one must learn to recognize when a trend is about to run
its course or is near exhaustion. By recognizing early
signs of exhaustion, the trader will protect himself from
staying in the market too long and will be able to change
direction when the trend changes.

27. When day trading against the trend, take profits
quickly
The trend is your friend, but there is nothing wrong about
trading against the trend. Just remember to lower your
goals and always place a protective stop.

28. You can usually sell the first rally or buy the first
break
Generally during the first hour of trading, after the
initial emotional move, the markets will have some kind of
pullback from their highs or a short covering move from
their lows.

29. Don't be greedy
Greed causes some traders to allow profits to turn into
losses because they hope for larger profits. When the trade
has reached your profit objective, take your profits or
reduce the size of your position.

30. Reduce the size of your position after a loss
If you are trading more than 1 lot and take a loss, it is
highly recommendable to reduce your number of lots until
you recover your losses. Decrease your position 20% if you
have lost 10% of your funds.

31. Never cling to the hope that a losing trade will turn
around
It is very simple to get out of a losing position and admit
that the trade did not work. Getting out of a losing
position as soon as possible is absolutely critical.

32. Stops must be non-negotiable
If a particular market traded at the stop price, then the
position has to be exited; each time, every time, without
fail. Only after closing it, you could consider the
convenience of getting back in.

33. Invest in your education as a trader
Learning how to trade is like learning any vocation. I have
never met a professional trader that did not pass a trading
course and that has not paid for it. Avoid cheap material
and learn from the pros.

34. It is not important how much you can make in a single
trade
It doesn't matter how much money you can make in a single
trade, if you can't make it on a consistent basis. The key
to being successful is being consistent. The amount of money
really doesn't matter.

35. Be aware of resistance and support levels
This is 100% true. The markets react to these levels,
simply because a huge number of contracts will be sold or
bought at those levels. You must observe them closely.

36. Find good advice
There is nothing wrong with paying for professional advise,
a good newsletter, and a good trading system. Once you have
them, keep them even if you find others. You can trade two
or more trading techniques.

37. Have a plan for every trade
Every trade is different, and your goals must be different
as well. For example on a range bounded market, it will be
difficult to catch a huge move, but it is realistic to make
a few profitable trades between the trading range.

38. Always check your filled orders
Silly mistakes happen a lot. You wanted to go long but you
actually came up short; you closed your position and now
you find that you have actually doubled a losing trade.
Once you place an order or get one filled, review that you
have place it correctly.

39. Be aware of your most dangerous enemy: yourself
Trading is a constant fight against your destructive
instincts. Don't let your emotions rule your trading
decisions.

40. Follow the news and overnight action
Now more than ever, political or economic news influence
market reaction. The overnight action frequently results in
non expected moves in the markets.

41. A good trade usually shows profits from the beginning
The real money in a good trading decision normally shows up
at the beginning of the trade. Don't wait long for a trade
that does not move in your favor during the first 6-7
minutes.

42. When your trade is acting right, don't be afraid to
add another lot
If you catch a trend and it is clearly moving in your
favor, don't be afraid to increase the size of your
position, but please use tight stops.

43. The price pattern repeats itself
Learn how to recognize low risk/high reward patterns. I
know many successful traders that trade only 4-5 well
defined chart patterns.

44. Don't be a gambler, be a trader
A gambler is ready to risk all his chips on a black jack
hand; a trader looks to live for the next opportunity.

45. Learn from your personal experience to control your
emotions
If you don't know yourself, the markets are an expensive
place to find out.

46. Mistakes will happen
Successful traders know that mistakes will happen. They
appreciate that making mistakes is a necessary part of the
learning process.

47. Protect your money first and your profit later
Be defensive when protecting your money, avoid big losses.

48. Learn to admit that you are wrong
Successful traders are risk averse; they don't like to
lose money, and once they recognize that they were wrong
when entering into a position, they move fast to close it.

49. Don't be pretentious and grandiose
Humility and modesty will help you keep your feet on the
ground.

50. Mind control is the name of the game
Trading psychology and behavior is the most important
aspect of trading, and understanding yourself and your own
personality as it relates to your trading is critical. Keep
it cool after a winning or a losing trade, relax, the
pressure is gone and the market is always there.

Six basic tenets of Dow Theory

1. The market has three movements

(1) The "main movement", primary movement or major trend may last from less than a year to several years. It can be bullish or bearish. (2) The "medium swing", secondary reaction or intermediate reaction may last from ten days to three months and generally retraces from 33% to 66% of the primary price change since the previous medium swing or start of the main movement. (3) The "short swing" or minor movement varies with opinion from hours to a month or more. The three movements may be simultaneous, for instance, a daily minor movement in a bearish secondary reaction in a bullish primary movement.

2. Market trends have three phases

Dow Theory asserts that major market trends are composed of three phases: an accumulation phase, a public participation phase, and a distribution phase. The accumulation phase (phase 1) is a period when investors "in the know" are actively buying (selling) stock against the general opinion of the market. During this phase, the stock price does not change much because these investors are in the minority absorbing (releasing) stock that the market at large is supplying (demanding). Eventually, the market catches on to these astute investors and a rapid price change occurs (phase 2). This occurs when trend followers and other technically oriented investors participate. This phase continues until rampant speculation occurs. At this point, the astute investors begin to distribute their holdings to the market (phase 3).

3. The stock market discounts all news

Stock prices quickly incorporate new information as soon as it becomes available. Once news is released, stock prices will change to reflect this new information. On this point, Dow Theory agrees with one of the premises of the efficient market hypothesis.

4. Stock market averages must confirm each other

In Dow's time, the US was a growing industrial power. The US had population centers but factories were scattered throughout the country. Factories had to ship their goods to market, usually by rail. Dow's first stock averages were an index of industrial (manufacturing) companies and rail companies. To Dow, a bull market in industrials could not occur unless the railway average rallied as well, usually first. According to this logic, if manufacturers' profits are rising, it follows that they are producing more. If they produce more, then they have to ship more goods to consumers. Hence, if an investor is looking for signs of health in manufacturers, he or she should look at the performance of the companies that ship the output of them to market, the railroads. The two averages should be moving in the same direction. When the performance of the averages diverge, it is a warning that change is in the air.
Both Barron's Magazine and the Wall Street Journal still publish the daily performance of the Dow Jones Transportation Index in chart form. The index contains major railroads, shipping companies, and air freight carriers in the US.

5. Trends are confirmed by volume

Dow believed that volume confirmed price trends. When prices move on low volume, there could be many different explanations why. An overly aggressive seller could be present for example. But when price movements are accompanied by high volume, Dow believed this represented the "true" market view. If many participants are active in a particular security, and the price moves significantly in one direction, Dow maintained that this was the direction in which the market anticipated continued movement. To him, it was a signal that a trend is developing.

6. Trends exist until definitive signals prove that they have ended

Dow believed that trends existed despite "market noise". Markets might temporarily move in the direction opposite to the trend, but they will soon resume the prior move. The trend should be given the benefit of the doubt during these reversals. Determining whether a reversal is the start of a new trend or a temporary movement in the current trend is not easy. Dow Theorists often disagree in this determination. Technical analysis tools attempt to clarify this but they can be interpreted differently by different investors.

Malaysia risks becoming next Greece

Malaysia risks becoming the next Greece unless voters swallow subsidy cuts that will see the price of petrol, food, electricity and other staples rise, a government minister warned today.

A government think-tank charged with producing plans to cut the country’s subsidy bill presented its plans to the public in a bid to win acceptance for painful cuts, which have yet to be voted on by the government.

Datuk Idris Jala, a minister in the prime minister’s department who heads the body advising the government, said that Malaysia’s debt would rise to 100 per cent of gross domestic product by 2019 from 54 per cent of GDP at present without the cuts.

“We don’t want to end up as another Greece,” he told a roadshow, referring to the European Union member whose debt woes have unsettled global markets.
Malaysia spent 15.3 per cent of total federal government operating spending on subsidies in its 2009 budget when its deficit surged to a 20-year high of 7 per cent of GDP.

The cabinet discussed the subsidy proposals on Wednesday, but any decision on cuts could be months away, a government source said.

Political analysts and economists say the failure of the government to push through previous subsidy cuts casts doubt on whether it can do it this time, especially with state elections looming in Sarawak, a government stronghold that is under threat from the opposition.

The proposals presented would see petrol prices for the benchmark RON95 blend rise by an initial 15 sen per litre from their current price at some stage this year.

The benchmark RON 95 grade now costs RM1.80 (US$0.543) per litre.

Under the proposals presented by the advisory body, the price of petrol would be hiked some time this year followed by two price hikes totalling 20 sen per litre in 2011 and two more totalling 20 sen per litre in 2012.

In 2013-2015, the price hikes would slow and by the end of 2015, the price of RON95 would stand at RM2.60 per litre, according to the plans that have yet to be approved by the government.

The forecasts were based on a crude oil price forecast of US$73.06 per barrel for 2011 and US$79.41-US$94.52 for 2013-2015. -- Reuters

Greece pledges corruption clean-up of politicians

ATHENS, May 15 — The Greek government promised to clean up corruption among politicians to restore public trust, but does not want to destabilise political life in the country as it struggles with a debt crisis that has shaken the euro.

Greece has been rocked by a series of major protests against government measures to cut the country’s bulging deficit. A key demand of the protesters has been a crackdown on corrupt politicians they blame for mismanaging Greece’s economy.

“What people want, and the government certainly shares that desire, is for there to be a clean-up both at the political and social level, so that relations between each other clear up and confidence is restored,” government spokesman George Petalotis told a weekly newspaper published today.

For decades Greeks have tolerated endemic petty corruption and political graft. But the current debt crisis has forced the government to push through a painful austerity plan in return for 110 billion euros (RM448 billion) in EU and IMF aid, and deliver on its promise to boost government transparency.

“There is such a climate that there is no option for the government other than moving ahead with fighting tax evasion and cleaning up politics,” Konstantinos Routzounis, head of Kappa Research pollster, told Reuters.

Several political scandals, such as a land-swap deal that cost the state millions of euros, known as Vatopedi, and a bribes-for-contract affair involving German firm Siemens, rocked the country under the previous conservative government.

Parliamentary investigative committees are looking into the scandals and are expected to yield results by the end of May and June, respectively. The Justice Ministry also is promising to probe the income of top officials.

“Certainly, there is the necessary political will and consent that the Siemens and Vatopedi cases that hurt our country’s political life are cleared out,” Petalotis said.

“But in no case will we fall into the trap of penalising the country’s political life,” he added. “In no case will we allow blood to be shed in the name of popularism and petty politics.”

The latest sign of government attempts to increase its revenue was the publication this week of the names of 68 high-earning doctors found guilty of tax evasion.

Yesterday, the Finance Ministry said 178,000 wage earners misled authorities by under-reporting their income or failing to declare any last year. This meant the state lost valuable taxes on undeclared income of about 700 million euros. — Reuters

Portugal's fiscal 'shock' to counter debt crisis

LISBON (AFP) - – After Spain cut public salaries, Portuguese ministers on Thursday took their turn to enforce a fiscal "shock" to stop the country becoming the next battleground in Europe's debt crisis.

While Australia's central bank warned that Europe's turmoil could hit Asian growth, international share prices rose as markets decided that the measures could just work.

Portugual's Socialist government has agreed tax hikes, wage cuts and to freeze major public works such as a new Lisbon airport as it battles to reduce Portugal's public deficit from a record 9.4 percent to target of a 5.1 percent of gross domestic product by next year, reports said.

The Jornal de Negocios business daily described the measures as a "fiscal shock," ahead of the cabinet meeting to put the final seal on the cuts. "All taxes are going up," reported Diario de Noticias.

Reports said the salaries of ministers, members of parliament, local elected officials and heads of public companies would be cut by five percent.

As a member of the eurozone Portugal is bound to hold its annual public deficit to under 3.0 percent of output.

Portugal's public debt, which came to 76.6 percent of GDP last year, is projected to widen to 86 percent in 2010, beyond the 60 percent eurozone rule.

Portugal and Spain, like Greece, are struggling to stabilise deficit-plagued public finances that have eroded market confidence and driven up borrowing costs.

The Italian government is now considering a freeze on public sector salaries and new hirings under measures that could save at least 2.0 billion euros (2.5 billion dollars), Il Sole 24 Ore reported.

The government this week renewed a pledge to reduce Italy's public deficit from 5.3 percent last year to 2.7 percent in 2012.

Britain's new centre-right coalition cabinet also started discussing the economy on Thursday. The government has promised an emergency budget in 50 days that will aim to start slashing public spending.

Spain's Socialist Prime Minister Jose Luis Rodriguez Zapatero on Wednesday ordered a five percent pay cut for public workers, a partial freeze on pensions and the scrapping of a 2,500-euro-payout for the birth of new children as he seeks to save an extra 15 billion euros over two years.

His cuts were in addition to a 50-billion-euro (63-billion-dollar) austerity package announced in January designed to slash the deficit to three percent of GDP by 2013 from 11.2 percent last year.

"Zapatero gets out the big scissors," said Spain's economic daily Cinco Dias.

Spain and Portugal's deficit attack followed creation of a 750-billion-euro (one-trillion-dollar) fund to help debt stricken nations in the eurozone. Europe's main stock markets in London, Frankfurt and Paris all rose in early trade Thursday amid new cheer over the continent's prospects.

Tokyo closed more than two percent higher and Hong Kong and Sydney were also up.

But Australia's central bank warned that Europe's renewed financial turmoil could pose a risk to Asian growth.

Assistant governor of the Reserve Bank of Australia (RBA) Phillip Lowe said emergency measures to stave off a European debt crisis had gone some way to restoring investor confidence, but doubts could resurface.

"Despite the recent announcements having stabilised confidence in Europe, concerns about public finances could build again," Lowe said in speech in Sydney.

"If they did, it would weigh on growth prospects for the countries directly concerned, and it could also weigh on prospects in Asia, particularly if it were associated with a marked increase in risk aversion globally."

Lowe said the RBA would be "watching carefully over the weeks and months ahead to assess how the balance of these risks is evolving", with the crisis in Europe, especially Greece, showing how circumstances could change quickly.

Lack of sleep linked to early death

LONDON (AFP) - – People who get less than six hours sleep per night have an increased risk of dying prematurely, researchers said on Wednesday.

Those who slumbered for less than that amount of time were 12 percent more likely to die early, though researchers also found a link between sleeping more than nine hours and premature death.

"If you sleep little, you can develop diabetes, obesity, hypertension and high cholesterol," Francesco Cappuccio, who led research on the subject at Britain's University of Warwick, told AFP.

The study, conducted with the Federico II University in Naples, Italy, aggregated decade-long studies from around the world involving more than 1.3 million people and found "unequivocal evidence of the direct link" between lack of sleep and premature death.

"We think that the relation between little sleep and illness is due to a series of hormonal and metabolical mechanisms," Cappuccio said.

The findings of the study were published in the Sleep journal.

Cappuccio believes the duration of sleep is a public health issue and should be considered as a behavioural risk factor by doctors.

"Society pushes us to sleep less and less," Cappuccio said, adding that about 20 percent of the population in the United States and Britain sleeps less than five hours.

Sleeping less than six hours is "more common amongst full-time workers, suggesting that it may be due to societal pressures for longer working hours and more shift work"

The study also found a link between sleeping more than nine hours per night and premature death, but Cappuccio said oversleeping is more likely to be an effect of illness, rather than a cause.

"Doctors never ask how much one sleeps, but that could be an indicator that something is wrong," said Cappuccio, who heads the Sleep, Health and Society Programme at the University of Warwick.

Research showed no adverse effects for those sleeping between six and eight hours per day.

SOLO Ride to Satun-Krabi-Ranong-Chumpon-Surathani-Nakon Sithammarat