5 RULES DISCIPLINED TRADERS FOLLOW 👨🎓Hey guys! In this article you will learn about 5 RULES DISCIPLINED TRADERS FOLLOW, let's dive in it!
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1️⃣ Follow Financial Plan, Do Not Go All In
A trading plan is a written set of rules that specifies a trader's entry, exit, and money management criteria for every buy or sell entry.
Do not go all in! Want to lose most or all of your money real fast? Make outsized trading bets, like a roulette player betting it all on red or black.
In fact, big trading bets are a form of gambling.
So avoid gambling, stop going “all in” in single stock or coin.
Start planning your investments, invest in the long-term at least 10% of your income every month in markets and other assets. If you invest a certain amount every month, you are buying shares in good times as well as bad times.
In good times, the value of your shares increase. If you keep your cool and stick with the plan even when the market is down, you get more shares for your money. These additional shares boost investment returns when the market rebounds.
This is a big part of the reason why regular stock investors get a higher long-term return compared to safer investments despite the temporary ups and downs in the market.
A long-term investor has a minimum of a 20-year time horizon; this time frame enables them to avoid playing it safe and to instead take measured risks, which can ultimately pay off in the long run.
2️⃣ Treat Trading Like A Business
To be successful, you must approach trading as a full- or part-time business, not as a hobby or a job.
If it's approached as a hobby, there is no real commitment to learning. If it's a job, it can be frustrating because there is no regular paycheck.
Trading is a business and incurs expenses, losses, taxes, uncertainty, stress, and risk. As a trader, you are essentially a small business owner and you must research and strategize to maximize your business's potential.
Think in Long term – Don’t trade like you are going to retire tomorrow
Have a Clean Trading Office That inspire you
Have a trading Plan for Your Trading Business
Don’t Present Yourself all Over the Market – Have a Proper EDGE over the Market
Have a Strict Daily Trading Routine & Follow it Continuously
Always Protect Your Trading Capital
Have Solid Trading Journal
3️⃣ Don't Trade Everyday
You don't have to open trades every day
Beginners tend to think that professional traders open their trades every day. But this is not true. Professional traders wait for good trading opportunities and only then enter the market.
Some days there will be no good trading opportunities. Sometimes the volatility will be too low, and you simply will not be able to take more or less decent profits. Sometimes, on the contrary, the volatility will be too high, and you will not be able to open your trades safely. There can be many different reasons in the market when it is best to refrain from trading.
Experienced traders know when to sit back and just wait. At the same time, most novice traders constantly open new positions because they think they should trade. But in the end, they make bad trades and constantly suffer losses.
If you don't find valid good entry points, but still open new trades, you will lose much more money than if you had the patience and stayed out of the market.
4️⃣ Accept Losses, Losses = Learning
It is much more useful to accept the fact that losses are the norm rather than the exception. It is also vital to define your potential losses before you enter any trade. Define your possible loss, or risk, in comparison to your possible reward, or profit. It is also vital that you don't take losing personally.
5️⃣ Risk Only What You Can Afford to Lose
Let the profits flow and cut the losses. This idea is one of the most common among traders.
As George Soros said:
It doesn't matter if you're right or wrong. What matters is how much you earn when you are right and how much you lose when you are wrong.
The key to trading success is to grow your profitable trades.
Traders who are afraid of losing their money often stop paying attention to the market situation and become too attached to the current profit. They make their decisions about open positions based only on the fear that the price will not reach their profit.
We know that unfixed profits still belong to the market. But once you start cutting back on your winning trades, you also cut your risk to reward ratio.
Of course, sometimes the market will give you less profit than you bargained for. And that's okay. To trade successfully, you must free the market and stop restricting it.
But if you are trading with money that you fear losing, you will not have that luxury. Instead, you will be afraid of losing your accumulated profits and you will not be able to sit back and let the market do its job.
The beauty of using multiple risk-reward ratios is that you can ignore your winning ratio and still make good money. If you reduce this ratio, you are faced with the need to make a high percentage of profitable trades in order to make a profit. Basically, you yourself are reducing your chances of achieving success.
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Always learn, never give up!
Best regards
Artem Shevelev
