I believe that it is imperative to be disciplined when trading. You should never lose sight of your ultimate goal, which is consistent profits. The most reckless traders ignore disciplined trading and they also avoid having any kinds of rules. They chase momentum, trade on a whim, double-down, so on so forth. I have made the mistakes of averaging down on a long trade and averaging up on a short trade. Those trades always caught me off guard, overextended my risk beyond a comfortable level, and set me back a few points in my trading account. Over time, I have learned from my mistakes, and I have picked up a few useful rules from fellow traders. Here are my top ten rules for successful (and profitable) trading:
- Have a system!
- Trade markets, not money!
- Have a favorable risk to reward ratio!
- Always trade with a stop loss!
- Don’t add to a loser!
- Strive for consistency!
- Don’t be afraid to make a profit!
- Avoid reversing your position!
- If you have three losing trades in a row, take a break and examine your system to see if you’re doing anything wrong.
- Remember, markets change and systems have to change with them.
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