COMMANDMENTS FOR SUCCESSFUL TRADING
Embrace Discipline. This is the very first rule followed by professional traders. Most traders shop around and spend money to learn self-control. But what they fail to realize is that discipline is never taught in a seminar or any trading software.
Create and Stick to Trading Plan. Create a well-laid trading plan. Then, update it every week or month to take out bad ideas and incorporate new ones. It is advisable to read the plan several times.
Lose the Crowd. To achieve long term profitability, one has to position ahead of or behind the crowd. But have you notice professional traders never stayed in the crowd? Everyone has their own ulterior motive in a crowd. Shy away from chat rooms and stock boards. Mind your own business.
Take No Shortcuts. You shell out thousands of dollars, exert extra effort, and spend much time to stand out in a competition. A successful trading is never achieved overnight, and cutting corners result to huge losses.
Avoid the Obvious. In rare cases, profit follows the majority. Whenever you notice a perfect trade setup, everyone else has noticed it, too. Also, they are putting you in the crowd and mapping your way to failure.
Adhere to Rules. These are supposed to keep you away from troubles in case positions move to the negative side. If you won’t allow these rules to do their job, which is to safeguard you and your position, you are breaking the first commandment – instilling discipline in trading.
Evade Market Experts. It does not mean to avoid them at all. They can impart insights, which might be helpful in trading. However, their advices or recommendations might refer to their own positions. So, at the end of the day, your own money, your own trade.
Believe No Company or Product. Never be emotional when trading. If you love a company or product too much, you might end up making flawed decisions. Instead, focus on capitalizing on efficiency.
Sort Out Personal Life. Never let any personal problem hinder your trading performance. This is especially dangerous if you have not made peace with money, wealth, and the magnetic contrariness of abundance and scarcity.
Try Not to Get Even. Drawdowns are inevitable. Traders have no choice but to accept it. Employ strategies that will make your performance back on track.
Pay Attention to Early Warning Cues. Most huge losses emerge with several technical warnings. But majority of traders opt to dismiss those signs and enable hope to replace thoughtful discipline, putting their positions at risk.
Differentiate Execution with Opportunity. First things first: These are two entirely different things. And second, a trading software, prepackaged with all types of proprietary buy and sell signals, can never make up insufficient skills. Remember, human creates the software. Now, who is more intelligent: you or software?
Play with Head, Not Above it. It may be fine to emulate your financial heroes, but that is another way to lose money. You may learn from their trades and mistakes, but establish your own market identity according to your trading skills, financial goals, and risk appetite.
Listen to Intuition. Our brain has two sides: logical and creativity. One cannot fully function without the other. Nurture both to achieve success in the long run. But before anything else, master mathematics.
Forget Paycheck Mentality. Trading is way different from work. As a matter of fact, statistics indicate most annual profits are booked on just a handful of days the market is open. The pay-for-effort mentality contradicts with the natural flow of wins and losses during the trading course of a year.
Count Not the Chickens. The money is not yours until you close out. Lock in the profits that you can as early as you can through partial profits or trailing stops. By doing so, hidden hands won’t be able to pickpocket your success at the last minute.
Espouse Simplicity. Trading is complicated in nature, do not make it more complex. Work on price action, everything else will follow. Yes, you may form complicated technical indicators, but the primary function is to validate or refute what your trained eye already sees.
Reconcile Losses. Losing money on a daily basis is a natural path to successful trading. Each loss is accompanied with a significant market lesson. Take heed.
Thou Shall I Become Aware of Secondary Reinforcement. Active trading produces adrenaline and endorphins. Both chemicals can produce feelings of euphoria whether you earn or lose money. Also, it cultivates addictive personalities to take bad positions just to get the rush.
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