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Trading Rules 1

Trading Rules 1

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Published by blackdogdave

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Published by: blackdogdave on May 28, 2008
Copyright:Public Domain


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An Overview
So, you want to make big bucks trading the markets? We’ve heard all thestories of how fortunes were made in the time it takes to say, “where’s thekeys to my Porsche?” But can it be done? Well – maybe. And you want apiece of the action, yes?And I don’t blame you. Trading for a living, for me, is the best occupationthere is. No boss, no overheads to speak of, work when you want, anywhereyou want, freedom; just you, the computer, and your plan. Plan?Of course, ‘plan’. Anything in life worth doing must have a plan of sorts.Trading is no different. In fact trading without a plan is asking for trouble of themost serious kind, financially speaking. You must have a plan. Read on.The content of this very modest document has been the subject of manybooks, has been studied in depth by the very best of us, and will be debatedfor years to come. My aim here is to plant a seed that hopefully will steer youin the right direction thus saving you countless dollars, not to mentionheartache and ruin.Before you start to lay your hard-earned money on the line, there are many,MANY, things that need to be taken into consideration. The very first lesson tolearn quickly is that the guys and gals who trade the markets for a living, theprofessionals, are not going to think twice about taking that money from you.They know all the tricks in the book, and a few more to boot. The idea is toact and think like those professionals and eventually become one. The profitswill then begin to flow.If you have no idea what you are doing, then you may as well just mail acheque to those above-mentioned professionals and leave it at that, saving alot of time.On the other hand, you could follow what I did. Learn their tricks. Copy them.In short, study, study some more, then continue studying. As they say,‘knowledge is a powerful thing’.Everything will then fall into place.
Where do I start?
Trading is very, very easy. Making a consistent profit is not - unless you havethe plan we talked about earlier; a master plan. You need to learn, andsustain, some good habits. The primary weapon in your arsenal in fightingyour opponents is getting the odds in your favour. Gaining an EDGE. Just likethe casinos. Take a look at the house edge in the casino and how small it is.Something like 2.5%, this is enough to make them a fortune over time! It’s just the same with trading the forex markets, get yourself an ‘edge’.Let’s stay with the casino example for a moment. They often have losing dayswhen a punter will win big. But overall, after the fat lady sings, at the end of the day, when all’s said and done, and after the cat has been put out, thoseboys are in the money. And that is because of the ‘edge’. Your edge startshere. Its not one item but your whole approach to trading. Soundscomplicated? Not really, when you break it down into its component parts.We’ll do this now with headings and sub-headings. There really is no point indoing this exercise if you only pay lip service to it. The following will get youinto the money, no argument.
 There’s no point in having trading rules if you don’t follow them, which verynicely brings us to golden rule number one.FOLLOW YOUR DEFINED RULES RIGIDLYThis rule may sound silly but think about it, how often do you break the rulesin some other pursuit such as driving, sport, work? Sometimes it can becostly, in forex it can be very expensive account-wise.These rules can be defined as:a)General rulesb)Trading rulesc)System rulesRemember, this is a very short article on the ways that I have tackled theproblem of gaining an edge in my trading, and in trying to emulate theprofessionals. This is by no means the only way, so you will need to addressyour trading traits in a similar manner to extract those profits from the marketthat we all aspire to. Let’s look at the general rules.
The reason you are reading this is because you want to make money. I havebeen in your shoes doing exactly the same thing, but at the wrong end of an£8,000 account. Yes, all gone! It wasn’t the first account that I had deliveredto ‘
the professionals’ 
so something HAD to be done. I made rules and dividedthem into sections, analysing them yet further. Here are my general rules thatyou may want to consider:a) General rules
Work/study hard continuously, knowledge is essential, but
Strike a balance, have a life. Trading at all times will make you stale
Take responsibility for every decision that affects your trading
Self-belief in your aim, in what you are trying to achieve
Do you want to trade full time or part time, how many hours per day?
What IS your aim, what do you want to get out of it, know yourself?
The only place where success comes before work is in the dictionaryA whole book could be devoted to just this section, this article cannot delvetoo deeply into what only you can answer for yourself. Please take the time towrite down your rules and how you will address them. Your trading will evolvefor the better I assure you.b) Trading rules
What type of trader am I, do I want action, stress etc?
Have a system that fits your trading style
Become good at one style, tweak it to suit you
Keep an open mind for each and every trade
Do not form opinions on the market, let it tell you where it’s going
Do not listen to the opinions of others
The words ‘hope’ and ‘wish’ are not in your trading vocabulary
Trade with money that is not indispensable, can you afford to lose it?
Learn to take losses as part of the business, learn from them
Take regular breaks from trading
Don’t over commit yourself, not too many open positions
Stand aside if you are not sure about a trade
Do not add to losing positions
Keep the dollar signs away, try to score points
Without fail, have a trading plan and trade that plan

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