Three GOLDEN rules of trading
Three golden rules of trading
1. Learn when to stay out of the markets. This comes from the principle that it’s almost always good to do the contrary of what beginners do. Think for yourself, beginners tend to always search for an entry and predict any kind of price action, even the choppiest one. The truth is, sometimes markets are in condition when it’s just doesn’t make sense to trade and we need to wait.
Some questions to ask ourselves: if I would enter 1000 trades like this, do I think it will be a consistent strategy?
Do I really see a clear price action development now, or do I want to enter very early to not miss the initial move, which by the way will develop basically out of nowhere? It’s an illusion that we need to predict everything. We need to see clarity, not predict the chop.
Realize, that what we often need to do in live markets is DO NOTHING.
2. Learn how to lose
Most traders who are still learning, and after a loser, tend to become emotional (fearful, frustrated, angry etc.) and start to act based on emotions, not an actual plan they had. This can be conscious when you understand you’re making a mistakes, but emotional brain took over and you still overtrade, tilt or over risk. Or it could be unconscious when you believe you’re doing the right things.
So how to do it? Be aware of your emotional triggers, have a mental journal and step by step learn to RESIST this desire to revenge and place another trade. It’s a long process, but with commitment, it’s possible to achieve.
3. Learn to actually follow the rules
It’s a hard one to master. Beginners and even experienced trades tend to deviate from the rules of their strategy without proper testing. You constantly need to keep in mind that placing random trades will give you random results and it’s not sustainable long-term.
The best way to do it is to start a rule-following challenge, when you tick day by day if you followed the rules.
Most people didn’t follow their trading rules even for 5 days in a row! Just think about it.
1. Learn when to stay out of the markets. This comes from the principle that it’s almost always good to do the contrary of what beginners do. Think for yourself, beginners tend to always search for an entry and predict any kind of price action, even the choppiest one. The truth is, sometimes markets are in condition when it’s just doesn’t make sense to trade and we need to wait.
Some questions to ask ourselves: if I would enter 1000 trades like this, do I think it will be a consistent strategy?
Do I really see a clear price action development now, or do I want to enter very early to not miss the initial move, which by the way will develop basically out of nowhere? It’s an illusion that we need to predict everything. We need to see clarity, not predict the chop.
Realize, that what we often need to do in live markets is DO NOTHING.
2. Learn how to lose
Most traders who are still learning, and after a loser, tend to become emotional (fearful, frustrated, angry etc.) and start to act based on emotions, not an actual plan they had. This can be conscious when you understand you’re making a mistakes, but emotional brain took over and you still overtrade, tilt or over risk. Or it could be unconscious when you believe you’re doing the right things.
So how to do it? Be aware of your emotional triggers, have a mental journal and step by step learn to RESIST this desire to revenge and place another trade. It’s a long process, but with commitment, it’s possible to achieve.
3. Learn to actually follow the rules
It’s a hard one to master. Beginners and even experienced trades tend to deviate from the rules of their strategy without proper testing. You constantly need to keep in mind that placing random trades will give you random results and it’s not sustainable long-term.
The best way to do it is to start a rule-following challenge, when you tick day by day if you followed the rules.
Most people didn’t follow their trading rules even for 5 days in a row! Just think about it.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.