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.