Top 10 Rules of Trading

Top 10 Rules of Trading

1.Do not overtrade 

◦Trade within your means 

◦Use 1/3 of your total margin only 

2.Always use protective stops to limit losses 

◦Go in with a plan 

◦Don't trade impulsively 

◦Have predetermined risk as well as profit 

◦Don't move stops higher or lower and say "It'll come back." 

3.Diversify your portfolio 

◦Try to avoid "Loading up" in any one commodity or product 

4.Keep emotions in tact 

◦Don't make trading decisions based on "Fear and Greed", as hard as this may be 

◦Make decisions away from the market - "Don't be a screen watcher" 

◦Don't let ego get in the way 

5.Trade in the direction of the immediate trend 

◦Don't try to pick bottoms or tops 

6.Don't add to losing positions - get out!

◦Don't Average "Down" or "Up" 

7.Keep it simple, more complicated is not always better 

◦Trade within your understanding of the markets 

8.Employ approximately a 3:1 reward to risk ratio 

◦Don't ever risk $2 to make $1 

9.Always be a student and keep learning 

10.Above all, be disciplined