FIRST RULE: ALWAYS USE A TRADING PLAN
A trading plan is a written set of rules that outlines the entry, exit, and money management criteria for every trade.
Your trading plan might not always be successful. Get out of it and begin again.
Sticking to the plan is crucial here. Even if the trades are profitable, trading outside of the trading plan is considered poor strategy.
SECOND RULE: TREAT TRADING LIKE A BUSINESS
To achieve success in trading, you must treat it as a full- or part-time business, not a hobby or a job.
If learning is approached as a hobby, there is no real commitment. If it’s a job, the lack of a regular paycheck can be aggravating.
Trading is a business that has costs, losses, taxes, unpredictability, anxiety, and risk. You are essentially a small business owner as a trader, and you must conduct research and formulate strategies to maximize your company’s potential.
THIRD RULE: PROTECT YOUR TRADING CAPITAL
It takes a great deal of time and effort to save enough money to fund a trading account. It can be even more challenging if it must be repeated.
Noting that protecting your trading capital is not synonymous with never losing a trade is essential. All traders have losing trades. Capital protection involves avoiding unnecessary risks and doing everything possible to preserve your trading business.
Understanding the significance of each of these trading rules and how they interact can assist a trader in establishing a successful trading business. Traders who have the discipline and patience to follow these rules can increase their chances of success in a highly competitive market.
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