Rules, And How Well We Use Them

I’m just curious about how strict traders’ rules are and how well they are followed. I would also like to see how this correlates to success in Forex trading. Do you have a strict set of rules you follow? Or do you intuitively know the markets, and enter and exit based on a more subjective feel for what’s going on?

Personally, I seem to do best when I’m following a set of rules I have laid out. They relate more to risk management then when to enter a trade. Such as stop loss placement, scaling out rules, when to quit for the day, etc. My entry rules give a little more room for interpretation. I’ve heard of traders far more successful than myself trading with more and with fewer and even no rules. How do you trade in this regard?

WHILE i am loath to state that there are no rules but to make profit on a “newbie” forumn, its how i trade and what i do every single day while playing this grand ole interactive monopoly game we call forex !

it hurts me beyond reason to watch people LOOSE money to stop losses and the other silly things people are SO attached to.

i ask that you simply demo an idea of mine
— take an H1 chart with nothing but a 14EMA on it, ENTER in the direction of the ema direction, make sure youre following proper money management rules (ok, thats one i will accept if one does not have the luxury of a VERY large account) and DONT set a stop loss !

EXIT when the currency crosses the ema in the WRONG direction (guess that could be called a sell signal) and see if youve made a profit or not.

this method is a REALLY RUDIMENTARY one, and you lose a lot of pips at the exit because it comes LATE, but I only wish to point out how forex works and how simple it is to make profit ---- granted, there are better methods that will give you greater profits, BUT I ONLY WISH TO SHOW YOU HOW SIMPLE IT IS TO MAKE MONEY !

the enclosed chart is nothing more than a simple chart that comes up when you first open MT4, and is usually done with a 14 ema, but it clearly shows just how simple your life can be !

understand that i am NOT endorsing either this method or not using stop losses, but demo the idea, and while there are WAY better methods around, this super simple one shows you how the market moves and why MOST rules are meant to be broken !

enjoy and trade well


[B][I]Within the great hall at Elfinore stands a wondrous coffer, precisely four cubits square and securely latched against the outside world. Inside that repository, shut away from impertinent eyes, abides many an intriquing trading secret garnered from around the world and over the ages !

As a child, i used to watch from the darkness as the secrets were debated and annotated by the elders. No one there held a single thought of my presence – BUT I KNOW WHERE THEY HID THE KEY !![/I][/B]

yeah i tend to agree with mp on this one. rules that work in a down market might not work as well in an up market, and probably wont work at all in a ranging market. so whats the point of doggedly sticking to a rigid set of rules when market conditions dont support them.

i personally think money management is far more important when first starting out

if i keep getting agreement from people, i shall soon run out of kewpie dolls to give away ---- guess, like cramer, i need to move to bobble heads next !

doobs says it all ---- MONEY MANAGEMENT and to heck with the other stuff, ESPECIALLY in todays market, which aint even last years market !

if you keep your money, you live to fight another day and THATS the bottom line!

as doobs points out, what works in a trending market doesnt in a ranging, and long and short is NOT just turning the chart upside down — a GOOD trader immediately switches to whatever works in the market she happens to be in AT THE MOMENT !

OK, maybe we change the word “rules” to “methods” because a newb will need SOMETHING to start moving forward, but that simple little system (which is NOT really that good, but works)that i showed will work even better if you add a normal support and resistance overlay, so you know where to enter and exit — thats NOT a rule, but simply an additional method that helps.

get the idea ?

enjoy and trade well


I too use an EMA, weighted, but have 2 other SMA lines that seem to tell me a great deal more. I use a “method” of SMA 13, SMA 55, EMA 55, colors… (mp might get a chuckle out of this) silver, blue, and gold… it may seem strange, but I’ve noticed that, no matter the pair, if the movement is smooth, price tends to hug my silver line. The other 2 lines I will leave undefined at current. Ofcourse, I use these on every chart I look at, to get a better understanding of what the market is really doing, clears up a lot of guess work.