Rules for Successful Trading

Rule #1 – Know What You’re Doing

In any endeavour, in order to be successful you must know
what you’re doing. Sounds obvious, but so many people get
into trading and get busy risking (and losing) their money
before they get a decent handle on what making money in
trading is all about. Most get busy before they are properly
prepared, and it is NOT as easy as it’s made out to be.

Right along with learning what the right things are, you
absolutely must know what the mistakes are that can hurt
you.

If you make money on one trade only to give it all back on
the next, then why bother at all? You have to know both
sides of the trading game to end the month ahead.

Most importantly, you have to protect the money you started
with, as well as any money you make along the way. Knowing
the pitfalls, traps and mistakes is the best safeguard you
can have and one of the most important steps for you to
take as a trader.

Rule #2 – Get a Handle on Your Emotions

Even after you build some competency with your trading and
after you get to know what you’re doing, you absolutely
must have a good handle on your emotions. Almost all of
the big losses and missed profits in trading come from the
trader allowing their emotions to interfere with good
trading and sound decisions.

Poorly managed emotions can and usually are the single most
costly aspect of the trading activity. Ask any veteran
that has achieved a consistent level of success and they’ll
tell you that you have to keep a cool head to make it as a
trader.

And that means properly managing your emotions.

Rule #3 – Know Your System

As part of your emotional control and in knowing what
you’re doing is to have your trading systemized, and then
to know that system well. You have to know what your
system is capable of in order to have any confidence in it
and in yourself.

There are several metrics that are critical to the trader’s
bottom line, several aspects of your trading the make the
bottom line what it is.

Critical numbers such as:

– Your true winning percentage
– Your true profit-to-loss ratio
– Your average win size
– Your average loss size
– Your average return on the trades your place
– Your return on your trading efforts (both in time and $)

Without keeping a close eye on these numbers, you are going
by chance and missing out on the opportunity to make your
trading better than it is and to see the profits that you
and your system are capable of.

Rule #4 – Treat Your Trading Like the Business That It Is

Any activity that you expect to be involved in and make
money from should be treated as a business.

This requires more than just throwing money at an
opportunity to make money. If you truly want to have your
trading produce an income stream for you, then treat it as
a business.

This means that you need acquire the right resources to
ensure that you give yourself the best chances of success.
Resources like:

– the right broker
– software
– data and information sources
– education

Now you shouldn’t just go crazy with your spending,
thinking that you can buy your success with a magic pill,
but you should also realize that going it alone and not
investing in your business is the truly costly and
difficult way to reach success as a trader. Budget for
and make the investments necessary to grow a solid
business.

Rule #5 – Make the Determination That You Are Going to
Become a Good (or Great) Trader

Your trading profits and losses over the short and long
term will be determined by what you do as a trader.

You have to take responsibility for your trading, and by
doing this you also take control over your fortunes.

The skills necessary for successful trading are learnable, and
you’ll find that every long term trader has been a student
of trading and most likely they still are, even after achieving
the level of success that most traders aspire toreach.

Acquire the tools you need to trade and focus on developing
your skills as a trader, along with yourself as the person
doing the trading.

Follow the rules above and give yourself the best likelihood
of achieving the goals you have as a trader.

For free reports and to find resources to help you incorporate
the above rules into your trading, go to the following links:

Rules 1, 4 and 5 – Know the pitfalls & traps, Treat your trading
like the business that it is, Become a great trader

Rule 2 – Getting a handle on your emotions

Rule 3 – Analyze your system and your trading