Trading Rules Guidelines

GUIDELINES to Trading Rules

Cross ref

Before I proceed, as you can see, I prefer to use my real name although short ie Ana aka IDkit in all my posts or comments in my own weblogs or others. After all in my own city, I am almost demi-public, and there is no point in my hiding behind an anonym. In fact, I tried to hide behind my popular name under Yin Wang at a recent free webinar for NOT (Nature of Trends), and I received a couple of queries whether I was Ana. Yes, I am Ana aka Yin aka IDkit.

Here, I am also echoing the sentiments of John Forman , author of The Essentials of Trading.

I say this because in the past, not now since I started my own Newsletter IDkit, I encountered some  cantankerous characters , taking my posts personally or did not like me/my mug for whatever reasons. The best way to deal with such is to either write them off or explain briefly your stand, without more. This is the best way to stop further acrimony, and move on in a positive light.

Having said all this, I would like to comment on some other trading rules to which you are free to comment too, but civilly, please.

Here goes:

Some Trading Rules to do:

1. Using Stop orders. I refer to my post yesterday on Stops. Comments have been mild so far. I know some traders, especially the experienced ones, may not believe in putting on a stop, although they admit they have a ‘mental stop’. I have also touched on mental stops in my own post, if you care to read.

2. Do not change your stops. My mentor teaches the same but what he means is we should not put a wider or shorter stop after having put it in. This is also generally good advice.

3. Close your position when profit is decent. Yes and no. I have been taught to run my profits long. One way is to use the Rule of 3 from my mentor, which is essentially scaling my exits to run my profits long, with trailing stops.

4. Do not overtrade. This is why money management is important and one simple way is to use the Turtle Formula for newbies.

5. Position sizing is vital. Again the Turtle formula for newbies would be a starter.

6. Look out for trending or range bound market. This is the first thing to look at because how you take a trade depends on going with the trend, which is your friend. Different rules apply for trending or directional market and sideways market.

7. Plan your trade and trade your plan. Having a plan is one thing, but to be able to recognize your plan is wrong, one must act swiftly and exit if necessary.

8. Clear rules of trading plan. As my mentor often does, he uses scenarios to base his rules for trading. One way is to use the If/then logic.

9. Paper trading for would-be traders. Most trading platforms offer paper trading for those completely new to trading and this is a good way to start. However, once this period of learning how to put on a trade is over, a newbie must learn how to trade LIVE in order to feel the pressure of trading with money on the line. Those who trade know the psychological difference when paper-trading and live-trading. Unless a newbie has traded LIVE, one cannot gauge one’s ability to trade well.

10. Aim for consistent profits , not to make money . For newbies, trading to make consistent profits is the hardest thing. This may take up to three years for most newbies to achieve just trading well consistently.

11. KISS system – Keep It Simple, Student (stupid is the saying). At the recent August seminars that I organized at the SMU, I find that some newbies are impatient and instead of focusing on learning good habits , the aim of the seminar, some want to learn more tools eg Barros Swings and Ray Wave, which are for advance students of BarroMetrics, to start with. Until one has mastered the basics with good habits, it is not helpful or too soon to add more tools to your learning curve.

12. Always or Never. Be careful of these two words as not all strategies are optimal. There are always grey areas in any rule, as my mentor has always reminded us.

AND ALWAYS strive to learn continually, and you will NEVER be in vain to be a better trader.

I welcome more comments on trading rules to add to the list aforementioned.


Ag Moderator

1 thought on “Trading Rules Guidelines”

  1. Nearer home, we have seen how banks have fallen due to poor risk control or money management:

    Eg in Singapore:
    Nicolas Leeson, the market trader.( For the racing driver, see Nick Leason.)

    Nicholas Leeson (born February 25, 1967) is a former derivatives trader whose unsupervised speculative trading caused the collapse of Barings Bank, the United Kingdom’s oldest investment bank. He is currently CEO of Irish football club Galway United.

    ANA aka IDKIT
    Ag Moderator

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