Category: 07. Rules

Keep Trading in Perspective

Stay focused on the big picture when trading. A losing trade should not surprise us; It’s a part of trading. A winning trade is just one step along the path to a profitable business. It is the cumulative profits that make a difference. Once a trader accepts wins and...
Read More

Know When to Stop Trading

There are two reasons to stop trading: an ineffective trading plan, and an ineffective trader. An ineffective trading plan shows much greater losses than were anticipated in historical testing. That happens. Markets may have changed, or volatility may have lessened. For whatever reason, the trading plan simply is not...
Read More

Always Use a Stop Loss

A stop loss is a predetermined amount of risk that a trader is willing to accept with each trade. The stop loss can be a dollar amount or percentage, but either way, it limits the trader’s exposure during a trade. Using a stop loss can take some of the stress out...
Read More

Develop a Methodology Based on Facts

Taking the time to develop a sound trading methodology is worth the effort. It may be tempting to believe in the “so easy it’s like printing money” trading scams that are prevalent on the internet. But facts, not emotions or hope, should be the inspiration behind developing a trading...
Read More

Risk Only What You Can Afford to Lose

Before you start using real cash, make sure that all of the money in that trading account is truly expendable. If it’s not, the trader should keep saving until it is. Money in a trading account should not be allocated for the kids’ college tuition or paying the mortgage....
Read More

Become a Student of the Markets

Think of it as continuing education. Traders need to remain focused on learning more each day. It is important to remember that understanding the markets, and all of their intricacies, is an ongoing, lifelong process. Hard research allows traders to understand the facts, like what the different economic reports...
Read More

Protect Your Trading Capital

Saving enough money to fund a trading account takes a great deal of time and effort. It can be even more difficult if you have to do it twice. It is important to note that protecting your trading capital is not synonymous with never experiencing a losing trade. All traders have...
Read More

Use Technology to Your Advantage

Trading is a competitive business. It’s safe to assume that the person sitting on the other side of a trade is taking full advantage of all of the available technology. Charting platforms give traders an infinite variety of ways to view and analyze the markets. Backtesting an idea using...
Read More

Treat Trading Like a Business

To be successful, you must approach trading as a full- or part-time business, not as a hobby or a job. If it’s approached as a hobby, there is no real commitment to learning. If it’s a job, it can be frustrating because there is no regular paycheck. Trading is...
Read More

Always Use a Trading Plan

A trading plan is a written set of rules that specifies a trader’s entry, exit and money management criteria for every purchase. With today’s technology, it is easy to test a trading idea before risking real money. Known as backtesting, this practice allows you to apply your trading idea using historical data and...
Read More