15 Rules You Must Follow To Become a Successful Trader

[mohsinqureshii 10]

Today We share Some rules that A trader must Follow to in order to become a successful trader:

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 # 4:DO 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.

RULE # 6: DO NOT FORM NEW OPINIONS DURING TRADING HOURS. PRE PLAN YOUR TRADE.

1)decide upon a basic course of action, then do not let the ups and downs during the day upset your game plan,

2)Successful traders prefer to formulate a basic opinion before the markets open. then look for the proper time to execute a decision that has been made. apart from the emotion of the current market.

3)When a trader Completely Changes his directions during the trading day it can confuse him ad may result in generating lots of commissions with little profits.

RULE # 7: TAKE A TRADING BREAK:

1)trading everyday begins to dull your life and relations with your family members.

2)A trading break helps you take a detached view of market and tends to give you a fresh look at yourself and the way you want to trade for the next several weeks. So take some time off and spend it with your loved ones.

3)A break also helps you see the market factors in a better perspective.

RULE # 8: DO NOT FOLLOW THE CROWD.

1)successful traders like breathing room. when everyone seems to be long, they loo for a reason to be short.

2)Historically the Public tends to be wrong. successful traders feel uncomfortable when their position is popular with the buying public, specially small traders.

3) periodic government reports on the position of traders of various size provide "overcrowding" clues. Another clue is " contrary opinion". When most of the advisory services are Long, for example, the successful trader gets ready to move to the sideline or to take a short position.

4) Some services give a reading on market sentiment determined by compiling opinions from many advisory services. If 85% of the analsts are Bullish, this indicates an overbought situation. If less than 25% are bullish, this indicates an oversold condition.

RULE # 9: BLOCK OUT OTHER OPINIONS.

1)do not influenced in your trading by what someone says, or you will continually change your mind.

2)once you have formed a basic opinion in the market direction, do not allow your self to be easily influenced.

3)You can always find someone who can give you what appear to be logical reasons for reversing your positions.if you listen to these outside views,you may be tempted to change your mind only to find later that holding your opinion would have been more profitable.

RULE #10:WHEN YOU ARE NOT SURE, STAND ASIDE.

1)do not feel that you have to trade everyday, or even hold a position everyday.the beginning trader is tempted to trade or hold a position everyday and this costly tendency.the successful traders develop patience and discipline to wait for an opportunity. After they have taken a position and begin to feel uncomfortable, successful traders either reduce the size of the potion or liquidate.

RULE # 11: NEVER ENTER YOUR ENTIRE POSITION AT ONE PRICE.

1)If you want tio be long certain number of lots you may want to do it 4 or more installments to see if the market is moving in your direction before you become totally committed.

2)Successful traders use the fundamentals and various technical signals to guide their trading, but the most important key is market action. the successful traders tend to wait for the market to verify that the initial position was a good one before putting on their full position.

RULE # 12: NEVER ADD TO LOSING POSITION

1)Regardless of how confident you feel, if you establish a position that shows a loss, do not add to it. it may mean that you are out of step with market. some traders do not agree with this rule, believing in a "Price averaging" Technique.

2)The successful traders interviewed believe this is a risky technique and a way to mentally justify adding to a position that only magnifies a mistake.

RULE #13: CUT YOUR LOSSES SHORT

1)When the market moves against you, admit your mistake by liquidating your position. you can be successful if you are right on less than 50% of your trades if you keep your losses short and let your profits run.

2)Some successful traders have only three or four profitable position out of ten because through discipline or stop loss orders they get out early when they are wrong.

3)one of the most common failures of new traders is their inability to admit they're wrong.

4)it takes a great deal of discipline to overcome the temptation to hang on to a loss, hoping that the market will turn in your favor.

RULE # 14: LET YOUR PROFITS RUN.

1)cutting your profits short can be the cause of unsuccessful trading.the slogan "you never go broke taking a profit" does not apply.

2)The reason, your losses will at the best cancel out or at worst outweigh your profits unless you let your profits run.

3)how do you know when to take a profit? Some technical rules on reversals and other chart formations can help. you should never take a profit just for the sake of a profit. have a reason to close out profitable position.

RULE # 15: LEARN TO LIKE LOSSES.

1)this rule says just the opposite of what many traders think. Learn to like losses because they are part of the business.

2)When you gain the emotional stability to accept a loss without it hurting your pride, you are on your way to becoming a successful trader.

3)the fear of taking a loss must be removed before you become a good trader.

 

That's it for today..happy Trading

[Obsidian 10]

Very nice summary for beginners

[phantom 16]

These rules bode well for POSITION traders, but some are not necessary for day traders.

(Did you get this list from a book?)

 

Sometimes it is quite alright to put the entire position on at once because we are trading from consolidation zone to consolidation zone and one may not get a second shot at entry as a market starts to move.

 

Furthermore, I don't look at ANY fundamentals to day trade, I look at price levels, S/R and volatility, as well as breakout zones and test areas.

 

I also don't know, or care for that matter what the "crowd" outlook is. In my mind, "its all in the charts."

 

My trading is directly linked to my desire for profits; this is why I am patient and disciplined.

 

I trade every day pretty much, no trading breaks to speak of...

 

etc...

 

In other words, the title of your article is a bit misleading. Sorry for being so frank, but very little in trading is absolute.

 

 

Luv,

Phantom

[Tams 20]

.

 

 

 

...... a total waste of time

 

 

 

 

 

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[zdo 20]

MUST ???????????

 

RULE # 1:USE MONEY YOU CAN AFFORD TO LOSE ????????? At first glance this seems like ok advice…Upon pondering though you wonder why they didn’t say – if you are undercapitalized, only use money you can afford to lose.. but then is it ok to lose it if you are well capitalized? Hell no! Becomes a short… wacky…truism. No successful trader I’ve ever known or was privy to the ‘real story’ could afford to lose their capital… This rule would hold more water if it were put into terms of how much of your starting capital can you “afford” to lose

RULE # 2: KNOW YOURSELF These rules are no doubt coming from an accepted source – so it is no doubt good advice – like a dam Temazepam prescription! You do not need an objective temperament, you can not actually “control” your emotions... successful traders are not necessarily unemotional about their positions…. a “hard nosed type of attitude” is not a requisite ... More importantly - None of these things mentioned here are central to what Know Yourself really is...

RULE # 3: START SMALL Seems like good general advice… but it’s better to start at your individually appropriate scale… which varies considerably across noob traders AND which is ABOVE sim for almost everyone !

RULE # 4 DO NOT OVER COMMIT A great rule! But - if you use any “rule of thumb” to determine the thresholds, you might as well go ahead and ignore this rule completely… ie use rules of thumb to start your testing – do not use rules of thumb to start your trading.

RULE # 5: ISOLATE YOUR TRADING FROM YOUR DESIRE FOR PROFIT What? This is the perfect habit to build if you want to engage in perpetual personal oscillation. Better to not isolate your trading from ANY emotions, feelings, or desires… seriously.

RULE # 6: DO NOT FORM NEW OPINIONS DURING TRADING HOURS. PRE PLAN YOUR TRADE

A better rule would be to form your new opinions any old time you like – just be AWARE as you are forming them.

RULE # 7: TAKE A TRADING BREAK: … as if trading work is the only work you ever need a break from??? btw: This one is the closest one to being an indispensable rule of all 15…

RULE # 8: DO NOT FOLLOW THE CROWD. This rule is messed up by the assumption that there is a singular “CROWD” out there… you are internally already a member of several ‘crowds’ and in every trade you are going to be 'following' one of those crowds.

RULE # 9: BLOCK OUT OTHER OPINIONS. Rather than resist other opinions, it’s better to just allow them into awareness without condition…

RULE #10:WHEN YOU ARE NOT SURE, STAND ASIDE. sloppy bs … trading is far from surety. Go as close as you individually possibly can to uncertainty! Signal quality is not a function of signal clarity – many great trades have marginal setups and signals… and many great setups and signals produce marginal trades. If you need to be “SURE”, find another frkn game to play…

RULE # 11: NEVER ENTER YOUR ENTIRE POSITION AT ONE PRICE System dependent – not a RULE you must follow

RULE # 12: NEVER ADD TO LOSING POSITION System dependent – not a RULE you must follow

RULE #13: CUT YOUR LOSSES SHORT System dependent – not a RULE you must follow

RULE # 14: LET YOUR PROFITS RUN System dependent – not a RULE you must follow

RULE # 15: LEARN TO LIKE LOSSES = compensatory, self – delusional bulsht...

 

That's it for today..happy Trading

[khamore1 10]

Quate

 

RULE # 15: LEARN TO LIKE LOSSES.

1)this rule says just the opposite of what many traders think. Learn to like losses because they are part of the business.

 

 

This is the most stupid sentence in the entire article

[SIUYA 11]

not to be picky....what did he ever do to you guys???

I think they are pretty GENERAL rules that may be worded slightly however they are certainly not so bad.

What if it was written LEARN TO ACCEPT LOSSES ?

This is a discussion forum and while 90% maybe BS, or trivial so it could be argued is most of life....

 

(dont ask why I feeling bleeding heart today, I think it has to do with some self help and be kind to others management book I picked up and read a bit of last night. I just thought it was a bit harsh)

 

What if it was more

 

RULE # 1:USE MONEY YOU CAN AFFORD TO LOSE

 

BE ADEQUATELY CAPITALIZED SO YOUR FOCUS IS ON TRADING CORRECTLY AND NOT FEEDING THE FAMILY

 

RULE # 2: KNOW YOURSELF

 

ADOPT A STYLE/STRATEGY THAT SUITS YOUR TEMPERAMENT and EMPHASIZES YOUR TRADING STRENGTHS and MINIMISES YOUR WEAKNESSES

 

RULE # 3: START SMALL

 

WALK BEFORE YOU CAN RUN, YOU DONT NEED TO MAKE MILLIONS OVERNIGHT

 

RULE # 4 DO NOT OVER COMMIT

 

SEE RULE 1 and 3, but also be prepared to commit 100% to your plan and testing and then commit to what you have tested that works when you trade. Have something you know works otherwise you are pissing in the wind and no one likes blowback

 

RULE # 5: ISOLATE YOUR TRADING FROM YOUR DESIRE FOR PROFIT.

 

SEE RULE 2 and 4

 

RULE # 6: DO NOT FORM NEW OPINIONS DURING TRADING HOURS. PRE PLAN YOUR TRADE.

 

SEE RULE 2 and 4, and have a contingency as part of the plan for flexibility

 

RULE # 7: TAKE A TRADING BREAK:

 

There is more to life than just trading, take a bigger perspective, it might actually help your trading, but focus when focus is needed. Not really a rule but a habit

 

RULE # 8: DO NOT FOLLOW THE CROWD.

 

This one I do think is too generic - there is often wisdom in crowds.

 

RULE # 9: BLOCK OUT OTHER OPINIONS.

 

See rule 2 and 4

 

RULE #10:WHEN YOU ARE NOT SURE, STAND ASIDE.

 

see rule 2 and 4

 

RULE # 11: NEVER ENTER YOUR ENTIRE POSITION AT ONE PRICE.

 

System specific - see rules 2 and 4... just for zdo

 

RULE # 12: NEVER ADD TO LOSING POSITION

 

System specific - just for zdo, and know that this is also likely to end with system demise.

 

RULE #13: CUT YOUR LOSSES SHORT

 

System specific ...see rules 2 and 4

 

RULE # 14: LET YOUR PROFITS RUN.

 

System specific ...see rules 2 and 4

 

RULE # 15: LEARN TO LIKE LOSSES.

 

Learn to accept losses and understand how/why/when they are expected as part of rules 2 and 4

 

 

so......I guess you are right guys - sorry my bad - throw out most of the stuff, stick to rules 2 and 4 and and you should be ok, or at least have some sliver of hope

[MightyMouse 12]

Quate

 

RULE # 15: LEARN TO LIKE LOSSES.

1)this rule says just the opposite of what many traders think. Learn to like losses because they are part of the business.

 

 

This is the most stupid sentence in the entire article

 

I do agree with you based on the way the rule is phrased.

 

Personally, I hate losses. So, can you trade if you hate losses? I think you can since I know I hate losses and do trade and I take plenty losing trades.

 

Maybe the rule should be: figure out how to not let losses impact your trading.

Or: keep your losses so small that they do not bother you mentally.

 

If small losses bother someone then losing might be the issue and that is a completely different animal to tame.

[roztom 10]

Quate

 

RULE # 15: LEARN TO LIKE LOSSES.

1)this rule says just the opposite of what many traders think. Learn to like losses because they are part of the business.

 

 

I have certaily heard this one forever... I don't think anyone "likes" loses... I do like when I lose for ALL the right reasons...

 

I also get it that if you have a viable trading plan and execute it properly that loses are the "cost of production."

 

I think it is difficult to make any kind of sweeping generalizations about how to succeed in trading. This list is rudimentary at best and there are much more thorough lists at TL.

 

As was mentioned, this list is generic and would not apply to many daytraders..

[zdo 20]

....what did he ever do to you guys???

 

I flipped out because this kind of conventional, broker/vendor bullsquat pabulum hurts far more noobs than it helps … seriously, it was not a personal attack on mohsinqureshii at all. Thanks, SIUYA for working and improving on them instead of just slamming...

 

… these RULES were most likely originally compiled by someone who had just turned profitable in the last few months and who didn’t personally see the need for all 38 of “Gann’s” (really his?) RULES. now...

Do I know jack? No, I do not know jack.

Do I know Jack? I do and he told me that within a couple of years after publishing his ‘how I did it’ autobiography that he wished he could retract almost all of it … that what he originally thought were the reasons he succeeded turned out to be erroneous attributions!

“Victory destroys knowledge” DanJohn

"Find your own way" zdo