Trading Rules - applies to Stocks, Futures and the Forex markets

A successful trader develops a set of rules that are never broken. There are many reasons why rules, or a system is extremely important; the system should include rules of when you enter trades, what point your STOPS are set to and the indicators you incorporate in your technical analysis.

[li]If you make a mistake and have a bad trade you can go back and see what was done wrong, learn from it and correct it. If you don’t have a set system, it’s hard to fix or adjust yourself and evolve; increasing the chances of making the same mistakes multiple times.
[/li][li]A good system takes time to develop and once it’s fine-tuned stick with it; constantly changing a system creates longer learning curves and can dramatically decrease your investing capital.
[/li][li]Lastly, and maybe the most important reason why a system is so important is because it helps control [I]emotions[/I]; [B]Fear and greed are a trader’s worst enemy.[/B]

The system I’ve adopted took time to develop, I literally have a print out on my main screen to remind me of the steps I need to take before ever entering into a trade. Trading styles, how much time you can devote to your terminal and the amount of capital you have all dictate a set system to follow. Here is the list I’ve created; while no system is perfect, the key is to find the right one for you.

[li]Use a STOP and never enter a trade without one; the range of pips depends on if I’m scalping or swing trading.
[/li][li](For scalping only) Trade in the direction of the market. If I’m scalping a particular futures which is trending up, I only buy the dips. If an instrument is trending down, I only short the bounces.
[/li][li](For scalping only) No overnight or absent positions.
[/li][li]Never rush into a trade; let the instrument create a good setup, don’t force one.
[/li][li][B]LET GO OF EMOTIONS… NO FEAR, NO GREED OR NO TRADE[/B]; a clear and calm mental state is absolutely critical to preserving your capital and maximizing profits.
[/li][li](For swing trading only) Candles in context, learn to recognize them for they are the best indicators since they derive directly from the source and not through mathematics. Also, use intra-day candle charts in combination with daily and weekly.
[/li][li](For swing trading only) Never trade without an eye to news.