16 Rules

16 Rules of
Happy, Consistently
Profitable, Millionaire
Traders
Rob Booker
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HEY, READ THIS:
Trading is a giant pain in the ass. Don’t make it any harder

by risking money that you cannot afford to lose.
These rules do not guarantee your success. Not having rules

absolutely guarantees your failure.
Trading involves substantial risk of horrific and

heartbreaking loss. It is likely that you will lose all of your
money, your wife and dog will leave, your favorite chair
will lose a leg, and the light in the lamp next to your bed
will blow out just when you need to get up and pee in the
middle of the night. You should consult with a financial
professional about your financial goals.
Please share this little book freely. You can share it with
anyone you want, anytime, and post it anywhere you like, as
long as you don’t change the formatting and you don’t
charge for it and you don’t claim that you wrote it.
Copyright © 2014 Rob Booker. All rights reserved.
A Story of Two Traders
Two traders started trading ten years ago.

Each of them wanted success in the worst way. They
wanted it badly.
Each of them wanted to provide for their families, have
more freedom, and have more control over what they did
every day.
Only one of them made it.
This book is about why. And how.
I wrote this book to inspire you to believe that you can

trade for a living.
I do it, thousands of other people do it, but sometimes it
seems so damn hard.
With this book, I would like to make it a little bit easier.
As I type these words, it’s nearly the end of 2014.
I’m a trader. I have been since 2001.
This year I will make about $250,000 from trading, even
including a $100,000 loss that I am holding right now. We
can talk more about that at another time (you’re probably on
my email list so you’ll get some updates).
When I obey my rules, I make more money. I have more
freedom in my life. Trading takes less time. And I don’t get
into trouble.
I want to share my rules with you.
Here we go.
My Rules
1. There is one kind of trading you can be great at.

That’s what you should do. And nothing else.
2. Your very best trades are created from:
overwhelming technical evidence on the charts; and a
fundamental or order flow “boost” to drive it.
3. Your investment in a healthy mind – courses, books,
motivational and inspiring material – will have the
most immediate and positive impact on your trading
than anything else.
4. Do not drink, smoke, or abuse your body or
otherwise become addicted to any substance, person,
thing, belief, burden, sorrow or experience.
5. Focus beats natural skill and luck every time. But, if
you have focus, AND skill, AND luck, you are going
to make a lot of money.
6. Trust one person to close out your trades if you break
your rules. Guess what? You won’t break your rules
anymore.
7. Your rules about how to handle losing trades are ten
thousand times more important than anything else in
your trading. There are Two Great Trading Rules
about money management can make you a
millionaire many times over. These two rules are:
8. “The Rule of Ten,” if you prefer to cut off losing
trades quickly. (see below for more info)
9. “The Rule of Thirds,” if you prefer to hold into and
work your way out of losing trades. Consider making
your 2nd trade 3 times bigger than your first. (see
below for more info)
10. Radical honesty will unlock long-term consistent
profitable performance.
11. You must believe you can & deserve to make
massive profits.
12. Your daily trading plan and ritual is not optional. If
you don’t plan, you don’t trade.
13. Your success is directly tied to your obsession with
accumulation.
14. If you open a trade with a massive size, then your
judgment has become distorted.
15. Never marry a trading position. The market does not
“always come back.” Don’t trade like it does.
16. If you find that you are stuck, reboot. Start anew.
Expanded Rules
For a one page version

of the 16 rules, go to:
http://tfl365.com/onepage.pdf
RULE #1
There is one kind of trading you can be great at. That’s
what you should do. And nothing else.
Business television will not make you money. And
neither will trading books stacked high on your desk. You
probably already know one system, one method, one trading
style that makes you money. But it probably isn’t your
ONLY focus because:
1) It doesn’t produce enough trades
2) It doesn’t make enough money fast enough
When you eliminate those concerns by realizing they are
stupid, you will suddenly be a professional trader.
Whenever you start to pile up losses and you are
frustrated, here’s how to get back to being a winning trader:
start trading the system you know works, and close your
winning trades with profit. Now you are a winning trader.
Wow, that was easy.
The best system is the system you can trade today, not
the one that you wish you could trade tomorrow.
RULE #2:
Your very best trades are created from: overwhelming
technical evidence on the charts; and a fundamental or
order flow “boost” to drive it.
I trade divergence. I wait for divergence to appear on the
1 hour chart.
When that happens, I ask: Is this divergence providing
me a signal to trade in a fundamentally sound direction?
Or: Is order flow in my favor (this is to say: am I trading
against a powerful flow or direction or with that flow and
direction?”).
Here is an example:
That’s the US Dollar against the Russian Ruble. The red
line underneath the candles signals what I call “Knoxville –
Trifecta Divergence.” I build the indicator (stay on my
email list if you want a copy of it for free).
That red line signaled that this currency pair “wanted”
to rise.
The fundamentals pointed to a strong dollar (Federal
Reserve was easing off its stimulus program). The order
flow pointed to the same – traders were selling oil, and the
Russian economy is heavily dependent on oil.
Did I buy?
No. I sold. (Dummy).
Why? Because I broke my rules.
I am now riding a loss because I broke my rules.
Don’t break your rules.
I’ll get out of the trade okay, because of the rules I’ll
share with you a bit later on.
RULE #3:
Your investment in a healthy mind – courses, books,
motivational and inspiring material – will have the most
immediate and positive impact on your trading than
anything else.
It makes me seem cheesy that I like Tony Robbins. And
Jim Rohn. And Og Mandino.
When I was 12 years old, I snuck a flashlight under my
bed and read Og Mandino’s The Greatest Miracle in the
World, and a lot of other books.1
You might think that a “masculine” profession like
trading doesn’t have room for the “law of attraction,” or
other funky, new age theories.
1
I also read The Richest Man in Babylon, Unlimited Power, The Road
Less Traveled, A Course in Miracles, Swim with the Sharks, and every
book by Zig Ziglar. One day my mom yelled from the other side of my
door, “I know you’re looking at dirty magazines, and put them away!” It
still makes me laugh - I was reading the books on success I’d stolen
from my dad’s house.
You would be wrong. I have traveled the world in the
last 15 years, speaking to hedge fund managers and
millionaire traders in more than 20 different countries. All of
the most consistently successful traders had these kinds of
books on their shelves.
Ed Seykota told me: “Some people want to lose. So
their form of winning is to lose money.” And that’s why he
filled his mind and his bookshelves and his life with
positive material.
Any investment you make in material that inspires,
motivates, and enriches your life will pay off in your trading
account. Especially anything that helps you gain a strong,
clear understanding of who you are and what you stand for.
RULE #4
Do not drink, smoke, or abuse your body or otherwise
become addicted to any substance, person, thing, belief,
burden, sorrow or experience.
Long-term consistent performance is not for weak-
minded people. Do not be a weak-minded person. If you
need help to overcome an addiction, stop trading
immediately, get the help you need, then come back to
trading. It will be here for you.
I have had long conversations with thousands of traders.
It’s my mission in life. Or it’s what I love. Anyway:
The most common obstacle to peak trading performance
is a clouded mind.
The easiest way to get a clouded mind is to pollute it.
I am not opposed to smoking or drinking or sex for
pleasure. In fact, I really, really, really enjoy … ok, anyway,
I just need to tell you I am not opposed to these things in
moderation.
But if you find that you are missing your trade planning,
or taking random trades, or huge losing trades, on a regular
basis, I implore you to deeply consider (and answer
truthfully):
Am I obsessed or addicted to anything in my life?
It could be a person, or an activity. It could be
pornography. Any of this stuff in moderation probably isn’t
going to harm you.
But if anything in your life becomes so important to you
that it is an addiction, it will negatively affect your trading.
While writing this paragraph tonight at my desk, I read
this rule to a friend. She is not a trader. She said, over the
phone, “I’ll have to call you back.” Then she texted me:
Rob, it is not possible to be addicted to a person. That’s
a dumb thing to say.
But I’m not taking it back.
If you need help with an addiction, get help! And then
come back. The market – and a lot of money and success –
will be here.
RULE #5
Focus beats natural skill and luck every time. But, if
you have focus, AND skill, AND luck, you are going to
make a lot of money.
Focus means that you do one thing great, and that’s all
you do. I look for divergence. Then I line that up with the
fundamentals. And I only look for these trades on a very
small number of financial instruments.
Natural skill means that you spend a significant amount
of time practicing. I practice by running the charts back in
time (I go back no more than 7 years so that I am looking at
reasonably similar market conditions) and I play the charts
forward, one candle at a time, and I trade my system. Over
and over. I practice getting into trouble, getting out of
trouble, and remaining calm under pressure. I am really
good at what I do because of this practice.
Luck means that if I have a trade open, and it’s going
well, I realize I’m lucky. I’m in the right place at the right
time. So I add to my winning position on retracements. You
want to make a little bit of money? Get into some good
trades. You want to make a lot of money? Get into your
good trades again. If you don’t have a way of doing this,
stay on my email list. Or just get some training on how to
do it, or better yet – get out your charts and invent your own
way of doing it.
RULE #6
Trust one person to close out your trades if you break
your rules. Guess what? You won’t break your rules
anymore.
This should be someone you feel comfortable screaming
at.
This should not be your husband or wife.
(In fact, it’s perfectly ok to not talk trading business
with your spouse. It probably bores the hell out of them and
they think that you are a degenerate gambler: just say this –
“I am doing a lot of work on becoming a better person, and
having more discipline in my life, and trading is going
really well because of that.” Then take out the damn trash,
or do something nice for your spouse or partner. Then they
will stop asking you “HONEY, HOW MUCH MONEY DID
YOU MAKE TODAY?”)
Ok, for real:
Allow one person in your life whom you trust to close
out your trades if you exceed your max loss threshold. This
person should have access to your trading account. Secrecy
does not make a great trader. Transparency does.
Then, I promise you, you will not reach that level. Ever.
RULE #7
Your rules about how to handle losing trades are ten
thousand times more important than anything else in
your trading.
Every morning when you get to your trading desk,
repeat in your mind, or read out loud, your rule about how
you handle your losing trades.
If you break this rule, your trading accountability
partner from Rule #5 will close out your trades.
Your rule could be: If my loss on any one position
exceeds 3% of my total equity, all trades must be closed.
Or:
If my total loss in the account exceeds 10%, all trades
must be closed.
It’s harsh.
But it’s solid. And once you have this rule, you work
your pants off to never break it. Reduce your trade size.
The single greatest thing that most traders can do right
now, to have more consistent success, is to reduce their
trade size.
Now, we need to talk about holding losing trades, or
cutting them off.
This is the great risk management debate: should you
close your losing trades quickly?
Let’s settle the debate.
There are Two Great Trading Rules about money
management can make you a millionaire many times over.
These two rules are in rules #8 and #9, below.
RULE #8
“The Rule of Ten”
If you prefer to cut off losing trades quickly, trade a
system that does not tend to ever lose more than 10 times in
a row.
If you are a discretionary trader, this rule is a must.
You will not be able to withstand – from a psychological
standpoint - a string of more than 10 losses in a row.
Even if 10 losses is a small amount of money, you will
want to chop your arms off if you lose that many times in a
row. And then you won’t take the next winning trade. Or
you will start to ramp up your trade size like a drunken
monkey.
[NOTE: I once knew a trader who lost $100,000 of his
family’s money and did try to chop his hand off. More on
that in another story, at another time.]
If you are a robotic trader and run trading systems with
a computer, then this rule does not apply (because a robot
doesn’t care about anything).
RULE #9
“The Rule of Thirds”
If you prefer to hold your losing trades until they come
back, I recommend the following:
Your first trade size should be three times smaller than
your “ordinary full trade size” for your first position. This
means that you are literally planning for your first trade to
be a terrible decision. This keeps you out of trouble.
Then your second trade can be your full position size, if
you added to the losing trade.
What about your third position?
I don’t think you should have a third position unless
your trade has come back into profit and is moving with the
trend toward your goal. In that case, I recommend adding a
third position with your full position size again, to add to
your trade.
I usually do this when a position has come back from a
loss and has crossed the original entry level.
Then I hold on and trail the stop so that I don’t get stuck
in a giant losing trade.
RULE #10
Radical honesty will unlock long-term consistent
profitable performance.
Tell the truth.
Say it exactly how you feel it.
Do not be afraid of your own point of view.
If you don’t like the food, send it back.
If someone in your life is toxic, say goodbye to them.
Do not be afraid to honor your own standards and
respect yourself.
Do not hide your losses.
Do not feel ashamed of losses.
Transparency will save you in the toughest moments.
Honesty lifts a weight from your shoulders.
Honesty relieves you of guilt.
It is important to be respectful and kind to the people
you love. I do not advocate being a jerk. Please use
common sense here.
I have a trading course where I talk about all the ways
that honesty can make an amazing difference in your trading
performance – and here is a preview:
1) Honesty about your results will prevent you
from getting prideful and then blowing up,
2) Honesty will keep you from showing only
the good results in the one account where you are
doing well,
3) Honesty means you will show an
accountability partner your results so that you
cannot hide what is going on in your account,
4) Honesty means that you will plant your feet
on solid ground and face trading from a realistic, not
hopeful, perspective.
RULE #11
You must believe you can & deserve to make massive
profits.
Once a friend of mine revealed to me that he lost
$50,000 trading S&P futures, by losing a $5,000 account
over and over – ten times.
He did not like where he lived. He had an unhappy
relationship. I told him I was sure that until he made himself
happy, he would continue to sabotage his trading.
Why, I asked him, would you want to make money to
sustain a life you don’t love?
I have another friend. His name is Scott. He lives in
Australia and raises bees. And he has a happy life. He is a
happy man. And he’s rock solid in his trading. He’s a
brilliant trader. Look him up on Twitter at @fatbeetrader.
The difference between the two?
One man loves his life and would do anything to keep it
going.
The other man was unhappy and subconsciously blew
up his accounts as a way of getting out of his current
situation. Eventually he got out of his bad relationship. He
moved to a city where he always wanted to live. He doesn’t
even trade anymore – but he is super happy, and super
successful. He is single but that’s good for him right now. I
know he’ll start trading again in the future, and when he
does, his mind and heart will be in the right place.
RULE #12
Your daily trading plan and ritual is not optional. If you
don’t plan, you don’t trade.
In the morning, I walk into my office, and as I turn the
corner to sit at my desk, I say:
“I plan only Class A (the best) trades.
I only take those trades.
My initial trade size is always X.”
Then I sit down and scan the 60 minute charts for the
divergence that I want to see.
Then I pick the 1 or 2 best trades.
Then I plug in the orders.
Then I check back through the day.
That routine is what makes me money.
When I break that routine, I break my trading account.
It doesn’t matter if your routine is like mine. It matters
that you have a routine.
RULE #13
Your success is directly tied to your obsession with
accumulation.
Name a billionaire.
He or she is an Accumulator.
An Accumulator is a person who values the stacking and
compounding of results on top of each other.
When I was 11 years old, I would hang out at a friend’s
house. I asked him what his father did – they lived in a huge
house on the lake. He said, “He owns a lot of gas stations.”
Gas stations, television stations, television factories – or
oil fields, or shipping containers, or rail cars, or insurance
companies, or restaurants … it doesn’t matter.
Billionaires acquire what they want to keep for a very
long time, and they keep collecting that same something
over and over.
For you and I, it’s trading profits.
You can reduce it to percentage points. You want to get
and keep 5% per month, or more. And then add to it next
month. Pretty soon 5% of your account is a giant number.
My friend Chris doubled a trading account this year. He
is now trading over $350,000. But his trade size is smaller
than some people I know who trade a $10,000 account!
What does he do to make all that money?
He trades small, adds to his winners, and never gets into
trouble.
My best friends Matt and Shonn each doubled trading
accounts this year. They did the same thing. They traded
small and they never got into trouble and they accumulated
spectacular gains.
When your goal is accumulation – not immediate giant
profit – you stack win on top of win, and you keep closing
winning trades and adding to the balance.
It is a glorious thing to acquire and accumulate profits in
your trading account.
Once you get it, keep it.
One simple way to do this is to NOT increase your trade
size as your account grows. That way you are risking less of
your account as your account moves up in value. Then
increase your trade size when you hit a milestone, like
doubling your account.
If you do this, when something goes wrong, it’s no big
deal. Slow and steady actually – when you trade this way –
produces HUGE gains over time.
RULE #14
If you open a trade with a massive size, then your
judgment has become distorted.
I don’t need to elaborate.
If you take a huge trade, you are mentally deranged. A
neuron has misfired in your prefrontal cortex of your brain,
and you have somehow disconnected your choices from the
obvious consequences.
Step back, close the trade (even at a loss) and catch the
first train from Fantasy Crazy Trade Size Land and join the
rest of us.
Your mental state is easy to determine from your trade
size.
A crazy person’s account has crazy person trade sizes!
(NOTE: I have been that crazy person before).
RULE #15
Never marry a trading position. The market does not
“always come back.” Don’t trade like it does.
I once got married to the Swiss Franc.
I held that son of a gun until I lost over half my trading
account. I got it back. I clawed it back and when it was over,
I had missed out on HUGE profitable trades. I had missed
the biggest move of the last 10 years.
Why?
Because I got attached to a point of view.
If you start saying things like, “There is no good reason
for this financial instrument to keep doing this,” you have
gotten engaged, married, and had 12 kids with that financial
instrument. Your divorce is gonna be royally expensive.
Don’t ever marry a point of view.
Your goal is to accumulate. If something is taking away
from your accumulation, then change your point of view to
match reality, and trade reality.
RULE #16
If you find that you are stuck, reboot. Start anew.
From The Book of Five Rings:
“When you and your opponent are fighting and
nothing is going right, nor is their progress, be of a
mind to throw off your former intention and start
entirely anew.”
If you are not doing well, change course.
Start anew.
(Seriously): Go on a juice fast. Run every day for a
week far enough so that you are exhausted. Meditate. And
throw out your trading plan. Start completely new.
When we are beginners, we experience what many call
“beginner’s luck.” Almost every trader has a story about
how trading was easier in the beginning.
When these traders get stuck, they mourn the loss of that
time when it seemed easy.
If it was easy at the beginning, then – I have a simple,
powerful, easy recommendation:
Start over.
It is never too late to start again, and do it right this
time.
Rob Booker is a father and a trader.
He lives in Gilbert, Arizona, in a quiet small house,
with a dog and a pony and a mini horse and a
donkey.
Talk to Rob here:
http://facebook.com/robbiebooker

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16 Rules

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16 Rules of

For a mobile-friendly version of

HEY, READ THIS:

Trading is a giant pain in the ass. Don’t make it any harder

These rules do not guarantee your success. Not having rules

Trading involves substantial risk of horrific and

Copyright © 2014 Rob Booker. All rights reserved.

Two traders started trading ten years ago.

I wrote this book to inspire you to believe that you can

1. There is one kind of trading you can be great at.

For a one page version

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