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10 Rules of Successful Trading: The Ultimate Guide to Winning In The Markets.

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10 rules of successful trading

 

Here are the 10 most important rules to follow to become a consistently profitable trader or investor. Use these rules no matter your experience or educational level and you will profit.

The concepts held within are not necessarily strictly for trading. You should be able to apply these 10 rules to any profession, hobby, or business, and find massive success. Enjoy!

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1. Stick with One Strategy, and Master it.

This is extremely important to an investor or trader’s ultimate success. Sticking to one strategy allows you to become a master of a single technique. I like to refer to the legendary sword fighter Miyamoto Musashi as an example.

 

Musashi was a legendary samurai who mastered the art of two sword fighting. He killed over 60 adversaries, never losing one fight his whole life. Why? Because he mastered his art. He knew every technique, attack, and defense possible in his niche and was rarely surprised.

 

While everyone else tried to learn everything they possibly could about everything, Musashi was learning everything he could about a specific craft.

 

If you can manage to master one strategy within one particular market, your chances of success increase dramatically. When I say master, it means putting in lots of time into perfecting your art. Hours of back testing, even more live trading, continued thorough study, and the discipline and persistence to succeed.

10,000 hours is the milestone for becoming a master in anything. It won’t be easy, but believe me, financial freedom and independence is most definitely worth it. I personally have become a master of using harmonic patterns in the Forex markets. That’s what I know, and that’s what I stick with. Using a very particular niche of only 3 patterns on only 4 currency pairs, I can focus and find consistency.

 

When you think you’ve found your niche, narrow it down even more, and you will have a very significant edge.

 

 

2. Having Total Confidence.

One of the many issues that occurs in the trading or investing arena is self-doubt. You will, and likely have, thought of every reason as to why you might be wrong about a trade or investment. This is normal, and usually occurs after a trade starts to turn south, or even right after you place it. Your stock or currency might be dropping a few points, you start to get anxious, scared even, asking yourself, was I wrong? Perhaps even telling yourself it was a stupid trade, and to get out now.

 

This is the worst thing you can do. Chances are you are totally right on with your analysis, and you’re just getting scared by a hiccup in price. Don’t abandon ship unless you’re sure you were wrong, the markets are never perfect, and neither are you. Refuse to let fear and worry get the best of you. Expect your trades to go against you for a short while and be prepared to cut the loss if necessary.

 

Don’t allow yourself to be scared out of a good trade. There’s nothing worse than exiting a trade, and watching it bounce back in the direction you wanted it to go. It’s gut-wrenching.

 

This can be solved by using proper predetermined stop losses, and limit orders for take profit. Let your trade play out automatically and let it be, that is unless you made a real mistake or something drastic or unplanned occurs.

 

Be confident in your ability to analyze and make decisions while in the market. If you can’t follow your plan with self-discipline, you will lose money, and leave even more on the table. If you don’t feel confident in your trades, then chances are you’re either not following a plan, risking too much, or simply not educated or experienced enough. This will all come with time, patience, and hard work. Just be confident and positive.

 

 

3. Accept Losses, and Expect Them.

In the trading world nothing is certain, except that you will win some, and you will lose some. Yes, on any single given trade you can potentially lose, there are no guarantees of success or profits.

 

However, when you use stop losses, limit orders, and good position sizing, you can limit your losses to be tiny, when being compared to your winners.

 

Remember, if you’re not prepared mentally, emotionally, and with the proper education and training, you stand to lose more than you should.

 

Even the best trader of all time loses money, but he makes more than he loses. So he still makes a good profit and considers the small controlled loss as a cost of doing business. He’s able to cut his losses short, admit he’s wrong, and move on to the next trade. Totally emotionless, this is the key to good investing and trading, or really any type of business.

 

One of the reasons many traders ultimately give up is because they can’t handle the losses. They just can’t handle being wrong, let alone admitting it. Either they lose too much on one big lottery trade, or try to get revenge on the market. You will be wrong, it’s simply impossible to guess everyday which way an asset being traded millions of times will be trending correctly.

 

We’re only humans, it’s okay to be wrong.

That’s how you learn.

 

However, you must make sure you are managing your money correctly by only risking 1% of your account on any single trade. People tend to get locked into a mindset that every trade or investment is going to win, or that this one will be the “Big One”.

 

Sorry, but it’s not coming.

 

Don’t expect anything crazy, just place your trade, manage it correctly, and let it be. If it wins, great. But if it goes wrong, it’s not so bad, because you weren’t really expecting anything crazy out of it anyway.

 

 

4. Use sound risk/money management.

80% of successful trading lies within the psychology of the individual trader, 10% on the trader’s strategy, and 10% on good risk control and money management. The last 5% determines how long you will have money in your trading account for.

 

Good management of your account depends on you never risking more than 1-2% of your account on any given trade, or more than 5% on any long term investment. This will allow you to take multiple losses in a row (which will happen) and still live to win another day.

 

By risking 1% If you take 5 losses in a row, you only lose 5% of your account. But, If you were risking 5% on each trade, you would have lost 25% of your account. That’s something many people never dig themselves out of.

 

Risk is controlled with the use of stop orders. If you’re not using stop losses, then you shouldn’t be trading at all. If something goes wrong, you have no protection. So when you lose, you could lose big. Ever hear of a stock market crash? Yes, they do happen, and if it happens to you, it could mean you lose everything. A market crash will probably occur at least twice in your lifetime. If you were alive in 2008, you already have been through one.

 

 

5. Leave Your Emotions at The Door.

Emotions play a massive role in a trader’s everyday life. You will get excited, scared, greedy, and depressed, probably all in one day. When money is on the line, we learn a lot about ourselves. Most people have no experience having their money at risk, or having it build up very quickly on its own for that matter.

 

Fear and greed will eventually rear their ugly heads. They are your two worst enemies while in the markets. While you are investing or trading, it’s important to act like a robot, an emotionless, cold, calculated money making machine.

 

Emotions have no place in the markets.

Just as an example of why, let’s have a look at a young man who’s just entered a trade.

 

He’s winning big, up a good amount, and tells himself, it won’t stop (greed). So he keeps adding on to the position, he had limit orders in place to take profit, but got rid of them because he could make more money (really greedy). So he let the trade go and got rid of the stop orders, thinking it’s golden.

 

He wakes up the next morning and bam, down more than he was up (Fear). He closes the trade at a major loss, with a direct hit to his confidence and capital.

 

If he had let the trade play out the way he planned it, he’d be in a nice profit, on to the next trade with confidence.

 

Be emotionless.

 

 

6. Trade and invest with positivity.

Positivity is very rare to find in today’s world. When putting on a trade you want to be positive, and happy with it, or you will have doubt and fear which will ultimately cause you to lose or close it for a loss. You have the potential to be making $100’s of dollars in a few minutes. This is more than most people make in a day. If that’s not something to be happy about, I don’t know what is.

 

To increase positive vibes for your trading, I recommend starting the day out with,

 

*
p<>{color:#000;}. Running over rules, either mine or your own.

*
p<>{color:#000;}. Positive affirmation of some kind.

*
p<>{color:#000;}. Reviewing your recent trades.

*
p<>{color:#000;}. Getting exercise.

*
p<>{color:#000;}. Meditation.

*
p<>{color:#000;}. Checking the news (financial and regular).

*
p<>{color:#000;}. Breathing and relaxing exercises.

*
p<>{color:#000;}. Trading in a dedicated, quiet, peaceful place.

*
p<>{color:#000;}. Reviewing your plan and strategy.

 

A positive attitude can have amazing effects on every aspect of your life, and in the markets it’s no different. If you enter this venture with a positive mindset that’s fixed on growth and learning, and can keep it, then you are destined for greatness.

 

 

7. Reviews and Journaling of Trades.

One of the most overlooked and underused aspects of successful trading is journaling. A journal should be a place for you to review and go over past trades, improve upon your trading, and see what you’re doing right, and more importantly wrong.

 

When people come asking me why their losing money, I ask if they journal their trades. For some reason, they almost never do. It could be the one thing holding you back in the markets.

 

A journal should just be a normal notebook that you write in every day.

 

Including,

 

*
p<>{color:#000;}. What trades you took.

*
p<>{color:#000;}. The market, asset, time and date.

*
p<>{color:#000;}. The strategy you’re using.

*
p<>{color:#000;}. Why you took them.

*
p<>{color:#000;}. What happened to the trades?

*
p<>{color:#000;}. Lessons learned.

*
p<>{color:#000;}. Profit and loss for the day.

*
p<>{color:#000;}. A summary.

 

I also recommend a calendar to keep up with important news events, and announcements, which can have drastic effects on an asset in a moment’s notice. This gives you a heads up on the best chance for a quick profit if played correctly, and if necessary you can plan to stay away from the volatility.

 

 

8. Have a Mentor or Partner.

This is another overlooked rule. Understandably, it can be very hard to find a good mentor for most skills. Having a mentor means you can basically skip over tons of research and experience, and figure out what works and what doesn’t quicker. It can cut down your learning curve massively. A mentor is someone who has a proven track record, and genuinely wants to help you.

 

Don’t fall victim to wannabe pros trying to sell you courses or trying to mentor you for $3,000. It’s a scam. Find someone who genuinely wants to help you out. Usually the easiest way to get people to help you, is by helping others. Go out and start talking to people on social media, offer them your help. You might be surprised at what comes back, I certainly was.

 

A partner is also very valuable to your trading. They can help keep you in check, make sure you’re following your plan, and you can give each other second opinions. It is also awesome to have someone to make money with, it makes it more social and fun. There’s plenty of good people out there, and plenty of bad people out there. Find the good ones and keep them close, they will be your helping hands to success.

 

Always remember to give due diligence.

 

9. Never Fall in Love

I believe this is one of the most important rules and it’s pretty self-explanatory. Be able to admit you’re wrong, don’t fall in love with an asset. If you can do that, you’re golden. No, you’re not perfect, and neither is anybody else. You will be wrong a lot, and if you can see it, admit it, and get yourself out of a tight spot, you will walk away richer and stronger.

 

The biggest loses occur when you simply can’t accept the fact that you’re wrong. Just because you think a stock is the next big thing, even though it’s dropped $20 since you bought it, means you’re getting emotional, and fell hard for it. This is a major mistake that causes more heartache and loss than anything else.

 

Admit you’re wrong and get out of trades or investments before your stuck with a devastating loss, and money left on the table.

 

 

10. Use a Plan, with Discipline.

Last and by far the most important, is the use of a detailed trading plan with discipline. A plan consists of everything that has to do with your trading. But it is only effective when you consistently follow it.

 

It should include,

*
p<>{color:#000;}. The strategy you use, and a detailed explanation of it.

*
p<>{color:#000;}. What your edge is, and how it presents itself.

*
p<>{color:#000;}. Positive affirmation (“I will trade only according to this plan”, “Only trade in the morning”, etc.).

*
p<>{color:#000;}. Lessons learned from past mistakes.

*
p<>{color:#000;}. The markets, time zones, and assets you trade.

*
p<>{color:#000;}. Timeframes you trade (Hourly, Daily).

*
p<>{color:#000;}. Basic tips and tricks you’ve learned.

*
p<>{color:#000;}. Detailed instructions for entries and exits.

 

Checklist before your trade takes place.

*
p<>{color:#000;}. Is there news coming out?

*
p<>{color:#000;}. Any major orders being placed?

*
p<>{color:#000;}. Am I using my strategy strictly?

*
p<>{color:#000;}. Have I recorded/reviewed the trade?

*
p<>{color:#000;}. Taken a screenshot of the chart?

*
p<>{color:#000;}. Only risking 1% of balance?

*
p<>{color:#000;}. With the trend?

*
p<>{color:#000;}. Do I have a stop loss/ take profit set?

*
p<>{color:#000;}. When will I move stops to breakeven?

*
p<>{color:#000;}. Is this a good time to trade?

 

A plan gives you an edge, it will keep you from making a lot of silly mistakes and honest. It will make you a better, more consistent trader as a whole, it is vital to your success.

 

 

So to wrap this up, to become a successful trader you need to follow the 10 rules laid out before you. If you control your emotions, keep true to your plan, and admit when you’re wrong, you can secure your spot in the 10% of successful traders.

 

I truly hope you find nothing but the highest success throughout your journey, wherever it may take you.

 

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Copyright © 2015-2016 Trading Sync

Published in 2015 by Trading Sync

 

Written by:

Brian Wieners ©

 

Edited by:

Brian Wieners ©

 

 

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First printing, 2015.

 

This publication is intended to provide accurate and authoritative information in regards to the subject matter within. This book is not designed to be considered professional advice. If professional advice is required, the services of a competent professional person should be sought out. None of the information provided in this book is to be considered investment advice or financial advice. Any information provided within is to be used for educational, informational or entertainment purposes only. Investing and trading involves the risk of loss. Please consider carefully whether trading or investing is appropriate for your current financial situation. Only risk capital should be used when trading. Investors could lose more than their initial investment. Neither the authors nor the publisher are liable for any actions prompted or caused by the information provided within this book. Any views presented are those of the individual author and do not represent the views of any of the organizations or companies that they work for.

 

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10 Rules of Successful Trading: The Ultimate Guide to Winning In The Markets.

  • Author: Brian Wieners
  • Published: 2016-04-01 03:20:07
  • Words: 2915
10 Rules of Successful Trading: The Ultimate Guide to Winning In The Markets. 10 Rules of Successful Trading: The Ultimate Guide to Winning In The Markets.