List of personal rules for trading that makes U successful

Veyron 16.4 said:
You ask a VERY important and very wise question. You might be a novice at trading, but your question proves that you are no dummy.

The very first hard learned lesson I got in the business of trading, was to not follow the crowd and do what the crowd is doing. I started out as a equity options trader and eventually made the switch to the currency markets. Over in equities, I saw the herd mentality rule the day. Bandwagon trading was the rule rather than the exception. The problem was the "group think" mentality that lead so many people down the rabbit hole and eventually into financial decay. When you are in a business with a more than 85% failure rate AND group think rules the hour, it does not take a rocket scientist to see that failure is not to distant in the future.

The second most important thing I learned was to get away from high manipulated markets and find a market that cannot be singularly manipulated by any competing source for long and extended periods of time. The stock market is notorious for being highly manipulated at several different levels. A singular stock can be set on its head by a singular manipulative source, for its own purposes. Stocks are also mathematically flawed as a matter of strict truth in that they can be suppressed to zero value, taking with it double-sided earnings potential with equal scale and magnitude. A lawsuit by a single individual almost anywhere on earth, can disrupt what might be a nicely trading stock - if you were Long the position. Finding out about that lawsuit before it is too late, is like finding a needle in a haystack - as just one example.

The third lesson I learned was the importance of finding a market with reasonably stable behavioral characteristics. All financially traded markets have wild-eye gyrations from time to time, but the best markets for trading are those whose data is always seeking its own normative level of equilibrium. A trader needs movement in order to profit on a regular and routine basis, but not just any kind of movement. A trader needs routine movement within a normative envelope or range of parameters that are consistently demonstrated as being the historically representation of the routine behavioral patterns of a particular market. Too little Delta and the range of profitability can be severely restricted. To much Delta and the probability for excessive draw before profitability might be too high. Therefore, it is important to find markets with an acceptable range of session Delta that allows for both profit and reduced risk at the same time. This single concept can save you TONS of lost capital in learning this lesson on your own.

The fourth lesson that I learned the really hard way, was the importance of developing a mechanical system to trade with. Trying to out think the market (which is always right 100% of time and thus, never wrong!) in real-time is a silly game, played by high-risk fools. I learned to front-run my thinking by building a trading system the contained the most effective thoughts, ideas, concepts and solutions. That's the entire point of trading with a system anyway - to remove the psychological barriers to successful trading in real-time. If I know that I'm going to do a "thing" anyway, why rehash the same thought over and over again, while introducing the probability of human error into real-time mix. That makes no sense. So, I use a system that already contains those thoughts which have been fully vetted, tested and analyzed against the historicity of the market data I trade. Using a fully vetted system is just plain smart.

The fifth lesson I learned the really hard way, was to finally trust the system I created. I eventually developed a way to trade without a system, but I still use the system to increase the rate at which my capital grows. Before I could trade without it however, I had to learn to trust it in the heat of battle, in real-time. It is one thing to trust your system during back-testing. However, it is quite another thing to trust that same system (or, any system) in live trading. At some point, you get comfortable with what you've created because you've been to war with it so many times in the past. You will also find times when your "mind" was telling you one thing about the market that day and the system was saying something else - only to find out later in the session that the system was correct and YOU were dead wrong. The inverse happens as well, but the former typically happens far more than the latter. Learn to trust what you have built and you will be light years ahead of most traders.

The sixth lesson that I learned was the importance of trading with financial goals that are built into the trading methodology that you deploy. Many people out there don't have a clue about size management. They have not run the numbers to see what effect a serious of blown trades will have on their overall account balance and long-term success. They don't even think twice about building a capital growth plan, because they really don't have any idea of what their probability for long-range success will be at any time in the future. They don't plan for the future consequently the future typically never comes for them. They sit with the same account balance they had several years ago, merely because they have not mapped their trading methodology directly into their capital management philosophy. They don't understand that connection because they cannot see that connection. And, it is a VERY real connection. Serious minded traders have a clearly mapped out capital growth plan that is strategically developed AND mapped directly into their trading methodology.

The seventh lesson I learned was the importance of risk reduction. I saved this one for last, because it is the most important as far as I am concerned. No trader worth his or her weight in salt fails to pay attention to the importance of reducing risk in every trade and ALL highly successful trades will walk away from a trade without looking back, if they cannot adequately identify, quantify, measure and clear the risk question BEFORE entering the trade. Good traders ALWAYS pay attention to how risk evolves. The best traders in the world understand that risk in fact, DOES evolve and thus their approach to trading must evolve with it. Developing ways to effectively execute on solid risk management strategies, both in your trade system and your capital management system, is the serious trader's imperative. There is absolutely NO such thing as a successful, long term trader who failed to get the risk management question under control. Learn to mitigate the risk in your trading and you will jump to light speed past most others calling themselves "traders."

There are many other detailed lessons that I could have laid out for you, but these were some of the biggest mountains that over the years, I've had to learn to climb.

Hope this helps and successful trading to you.
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I think in your theses there are a lot of accurate hits regarding the general rules of trading. I once had to write an essay on a similar topic, about foreign trade with third world countries, which I published for students on meowessay.com . And the second views very closely intersect with the general established rules, many of them are considered postulates
 
GCSICLRBC said:
#1 -- Do NOT attempt to become a scalper

#2 -- only use risk capital

#3 -- Never lose more than 3 points on ES or $0.25 on CL

#4 -- Let your winners run as long as you can stand

#5 -- Learn to draw great straight lines

#6 -- Leave indicators, oscillators & squiggly lines & volume to the amateurs.

#7 -- Be a good patriot person & enjoy these freedoms to trade.

GL!:)
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GOOD, GCS.
I like ETFs + moving averages myself. Straight lines also======================================================YOU could actually most likely sell that /LOL:D:D:D:D:D,:caution::caution:
 
Here is one more rule to make u successful.

1) Back up your data! I went to repair a computer today and the guy had not backed up his data and his hard drive was not detected. It is under warranty so another hard drive was ordered for him, but obviously that hard drive will be blank.

I have all my data backed up to a thumb drive but you could also use google drive or another online service.


---- Oraclewizard77
Certified Dell and Lenovo Field Engineer.
 
1. Plan your trade and trade according to the plan.
2. Hope and fear are the two worst enemies of trade.
3. Record trading results.
4. Maintain a positive attitude regardless of the size of the loss.
5. Constantly set higher trading goals for yourself.
6. Stops are the key to the success of many traders. Limit your losses.
7. A successful trader is one who has been trading for a long time (experience grows).
8. Always take time to study the market.
9. Always set the profit margin for each trade.
10. Never exit the market just because patience is running out, and do not enter simply because you are tired of waiting.
11. Do not remove stop loss while trading.
12. Discipline yourself by following predefined trading rules.
13. Divide your profits in half. Never risk more than 50% of your profits in the market.
14. The market is stronger than me. It is useless to fight the market.
 
Veyron 16.4 said:
Of that there can be no doubt. No one should ever misconstrue that fact. However, what is risk? How is risk defined? How does risk get identified? Can the identified risk be mitigated sufficiently to allow for a professional endeavor on a long-term basis? How does one qualitatively measure risk?




Gambling is not Trading, when approached properly. Trading can be no different than gambling, when placed in the wrong hands.

!
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Wrong. Gambling is Trading. Trading is gambling. I'd like to inform you that there exist individuals who list, on their tax return, their occupation as "professional gambler." This is a bonafide IRS designation that meets the requirements of professional business activity in gambling.

I think you are confused. You are co-mingling terms. However, there are 4 terms here that you should think in terms of. 1. Professional trader vs. losing (typical)trader and 2. Professional gambler vs. losing (typical) gambler. Professional gamblers and traders face the exact same psychological, probabilistic, and mathematical skills sets they must develop to profit as a business person.

Please amend your definitions and thus your incorrect conclusions regarding gambling and trading. It's likely status bias plays a part in your mis-characterizations. Have you read any trading books, particularly New Market Wizards? Why don't you pick up a copy or find one online and see some examples of successful gambler/traders. Take note of the outstanding traders who referred to their ability as gamblers in order to build bankroll. There is a living example of an excellent gambler who also founded a still running deposit prop firm. Can you name him?

The primary differences between professional gambling and professional trading are surface in nature : venue, technology infrastructure, perceived status, and fund liquidity (gambling funds are instantly liquid, trading funds are not). The similarities are: strategy, bankroll considerations, plan, money management, taxes, expenses, time period of play.
 
OldBoldTrader said:
...The similarities are: strategy, bankroll considerations, plan, money management, taxes, expenses, time period of play.
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There are old traders, there are bold traders, but there are no oldboldtraders. So you are a living contradiction on this site.

Trading is not gambling. Period.

And drop the "professional" tag on any of this. You seem to intimate that only "professionals" make money, and non-professionals lose money. It means nothing.
 
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