Golden Rules For Traders

Great. But I am not sure how to remember all that. It may be good to check all before making a trade or decision, but time will fail me.

I think you are right. It would be helpful if you could perhaps identify the main rules you feel would most help beginners avoid key mistakes and build their plans on a solid foundation.

Hi NickQ,
I will identify and republish a shorter list. May take a few days and a bit of grey matter

Hi Nick,
Surprisingly this only took me about 20 minutes, and it has helped me refocus on my own plan too, so thank you. I have changed some text in the third column, more as an aide memoir to myself.

Rule Description Evidence in Plan (RTM1)
1 R3 Use a system, any system, and stick to it. Algorithm system
2 R5 Do not overtrade Max 2%, max concurrent 5 trades
3 R6 Take a position only when you know where your profit goal is and where you are going to get out if the market goes against you See Entry criteria
4 R7 Trade with the trends, rather than trying to pick tops and bottoms See Strategy and Plan, which is a Trend Following Plan
5 R14 Have a disciplined, detailed trading plan for each trade. i.e., entry, objective, exit, with no changes unless hard data changes. Disciplined money management means intelligent trading allocation and risk management. The overall objective is end-of-year bottom line, not each individual trade Validate in the trading strategy and plan content
6 R23 Program your mind to accept many small losses. Program your mind to ‘sit still’ for a few large gains Validate in trade management plan
7 R29 Standing aside is a position In trading plan, set up, recognise that the “do nothing” option will often arise. So do not trade
8 R39 Don’t trade unless you’re well financed…so that market action, not financial condition, dictates your entry and exit from the market. If you don’t start with enough money, you may not be able to hang in there if the market temporarily turns against you. Initial account is < £500. Create plan similar to that of Crypto that has funds increasing in three major, twelve minor increments that depend on positive account profit each step. Fund from other investments or from savings on a regular basis.
9 R42 Analyze your losses. Learn from your losses. They’re expensive lessons; you paid for them. Most traders don’t learn from their mistakes because they don’t like to think about them. Trade journal, diary on entry, during trade management and on exit. Did this go according to plan? See BP post on trial analysis of Mistakes two weeks after live trading a proof of concept using templates set up to identify and analyze mistakes
10 R48 Periodically redefine the kind of capital you have in the markets. If your personal financial situation changes and the risk capital becomes necessary capital, don’t wait for ‘just one more day’ or ‘one more price tick,’ get out right away. If you don’t, you’ll most likely start trading with your heart instead of your head, and then you’ll surely lose. In first year plan, protect independence of risk capital as x%, then y% of assets, x and y being small numbers between 1% (mature adults) and 10% (younger adults). Plan to use a proportion of your savings to fund this. If you cannot make any savings regularly, ask yourself if you should be trading? If you want it badly enough, forego some other interest to fund it regularly, like anything else that is important to you.
9 Likes

I think that would be a great help! Thank you

Wow, this is great. R42, that’s a really good one. 49 should be higher up, at least for newbies to know. in bold, haha. Bookmarking this. No need to shorten at all!

1 Like

thanks man. for your great effort

Brilliant, this is a much more user friendly list! You even got it to 10!! :grinning: Thanks for this!

Hi NickQ,
I am about to set up some manual backtesting, and will create a journal before I start. I shall check the journal against this list of 10 (and also against the list of 50) to determine whether those golden rules are implicit within the trade journal, or if any need to be called out specifically (eg. “check the daily news for scheduled events, and the morning finance news for unscheduled events that may discourage me from entering a trade. Does that news impact my chosen currency pair? If not, don’t trade”.)

I will share any thing useful in the appropriate discussion forum

1 Like

Sounds good, I think it’s important to keep the plan under review, but to have a core set of rules that don’t change!

Thank you. This will be a whole lot easier to remember.

Stick to a plan, that’ll help you be more disciplined. Most important, do not be greedy and do not over trade. Those are two things that can cost you too high.

1 Like

Every trade should be opened and closed plan wise. And when it is doen plan wise, it is called discipline. Trading by maintaining proper strategy is essential because it brings discipline in trading. After each of your plan executed properly, focus on selecting a reliable broker for you.

I’m with you on this. I feel like people have latched on to the 50 in your title and taken it too literally. And I’m new, never even traded Forex but am neck deep in crypto. The learning curve is steep and my pockets aren’t deep so I accept as much help as possible. Thanks!

1 Like

Hi @phlipit
An old post you have brought up here, but a timely one. For the past six months I have been mentoring two friends who, as part of their longer term investment plans wish to purchase UK residential property - one a UK resident, the other an Australian resident Brit who emigrated 30 years ago. Two different cases with one thing in common. Both are investing in the UK because of the combination of differential gross yields on property in the UK compared with their other investments.

Then the new government bombshell happened this week - the decision to borrow another £234bn on top of a bill already in excess of £2 trillion. Are they planning to bankrupt half the country whose mortgage payments have just about doubled in six months (if on variable rates) on top of a doubling of energy costs? Or do they just think we all have residual income the size of Rishi Sunak’s wife.

Anyway, I have asked both of them to continue their plans to move their non-GBP assets to GBP (best rates since about 1979) but to hold off an any actual purchases planned, expecting a knee jerk reaction in the markets. I haven’t traded Forex this year but like you I am knee deep in Crypto, but happy to hold, and contemplating a small return to adding to the crypto portfolio. All the “rules” of an investment or trading plan are there to be broken when circumstances dictate

2 Likes

Thanks @Mondeoman for your nice work!

Wow. That’s very complex (for me) and incredibly scary when i think of my family. They live in the UK I live in USA. Maybe I should buy them some GBP. I always get on these old posts so thanks for responding.

Here are some golden rules for traders in the FX market:

  1. Always have a plan. Before you enter any trade, you need to know what your goals are and what you’re willing to risk.

  2. Don’t trade with a very big amount.

  3. Have patience. Don’t expect to make a fortune in the first few trades. It takes time to learn the ropes and become a successful trader.

  4. Don’t get emotional.

  5. Learn from your mistakes. Yes everytime you trade, learn from your mistakes.

There’s an unspoken rule about back seat editing, don’t do it. Start your own post instead.

Hi philipit,

It’s a discussion forum and if you check out the conversation my observations were appreciated and acted upon, with much thanks from me. The whole point here is to have a discussion and refine, and to learn from one another, not to go off starting separate threads that would make no sense! I don’t see this as back seat editing, and nor did others in the thread.