Saturday, July 14, 2007
General Rules for Trading Systems
* Understand why you are trading in the markets. Are you seeking
a gambling thrill or are you serious about making money?
* Use a system and don't deviate from it.
* Use money management at all times.
* Establish your trading plan before the markets open.
* Detail your plan for each trade.
* Establish entry and exit points and understand risk reward ratios.
* Accept small losses as part of the game if you want to win.
* Trade markets from the short side.
* Maintain a strong and honest relationship with your broker.
* Develop a business plan. Speculation is a business.
* Stay the course so you are around for the big moves.
* Don't blame the market for your losses. You are the reason for
* Develop a trading plan for each potential situation you may face.
* Do not look at quotes during the day.
* Do not concentrate on break-even levels when you are losing.
* Remember that break-even levels do not impact on the future
success of a position.
* Don't liquidate a winner to keep a loser.
* Develop and maintain an exit plan. Follow this plan with rigid
* Remember that greed kills.
* Never add to a losing position. A losing position means you were
* Sustain your patience. Big movements take time to develop.
* Remind yourself there is nothing new in the markets.
* Don't predetermine your profits.
* Avoid techniques you don't understand.
* Don't be overly curious about the rationale behind a move. The
key to wealth in trading is simplicity.
* Trade money not markets.
* Bulls and bears make money, but pigs get slaughtered.