You are on page 1of 1

Trading Rules “Randomness is unstructured freedom without responsibility.

” By following these rules strictly I will be taking responsibility for my trades and my resulting outcomes will be consistent. Consistency is the route to trading success. Rule 1: Only trade when time available to assess trade potential and manage trade timescale. Do not trade in a rush Do not trade when not at desk Why: Full assessment of market and factors such as news not possible when away from desk. Trade management is more difficult on mobile app. Rule 2: Only trade FTSEDay set-ups and no others. Reversal trades – double top, double bottom, wash and wipe, one-legged man, magic number Momentum trades – MA Cross, CJ Pullback and Wilson method Do not chase trades Do not try to catch a falling knife Why: Set trades allow for consistent planning and risk management Rule 3: Only trade after assessment of individual trade risk Assess all trades within market cycle and plan stops at appropriate levels with appropriate trade size, ie 10 pips stop =100% trade, 20 pip stop = 50% trade etc Why: Proper assessment allows for appropriate stop management and increases likelihood of trade success Rule 4 Manage every trade once placed Monitor trade for signs of invalidity eg. slow increase of stop losses and if necessary remove trade before full stop loss hit Allow trade to develop and do not move stop +1 until a) some profit taken b) trade has moved 7-8 pips or c) trade invalidated Aim to take some profit (50%) every trade at 6 to 10 pips. Plan trade exit point eg set level for close or appropriate move of stop to protect gains Why: Poor trade management is the biggest cause of trading losses Rule 5 Trade for a target of 10 pips in the trading session only 10 pips is both cumulative and individual trade target, close trade or stop move to protect 10 pips as soon as reached. Extra is bonus Do not continue to trade once target met. Why: Successful trading requires intense concentration and 10 pips is just reward for work done. Maintaining continued focus further is not necessary. Remember reduced focus = greater risk Rule 6 Remove personal ego from trade placement Stick to trade set-ups and do not bias trades with personal opinions or beliefs Base assessment of market direction on current market action only Why: It is not possible to accurately predict movement and the only true indicator is the market itself Michael C April 3, 2012