â€¦Always Have A Trading Plan, And Stick To It!
Preparation is half the battle. If youâ€™re not prepared to execute a trade, the odds of your success will probably be elusive. The following are some practical guidelines and tips for trading that will help you prepare. While these guidelines and procedures may look simple, often looks can be deceiving.
â—Â Discipline is an essential part of trading.Â Without discipline you will NOT succeed!Â Discipline is sticking to your plan of action â€“ your trading methodology.Â A part of this includes sticking to your entries, stop losses (ISL), profit taking, trade management, money management, etc.Â Oftentimes this is harder than it seems because itâ€™s only normal for your emotions to get involved.Â You must master this though!
â— Always Know Why You Are Trading. You must have a purpose.Â Always know why you are trading.Â Always have good sound reasons for taking a trade.Â Never shoot from the hip or trade basedÂ on hunches! Make sure youâ€™re trading based on something that makes sense â€“ technically (based on your charts).Â Ask yourself, â€œIs it a thrill?â€Â To make a living?Â Whatever the reason is, knowing your purpose will help you trade with clarity and direction.
â— Plan Before Trading & Always Stick To Your Plan. Know beforehand exactly what you will be doing at all times.Â Plan your trades and follow through on your plans. For example, know what market you are trading, where you are going to enter and exit the market, how much time you will give the market to move before exiting, where you will take profits (if using a profit target), and how you will trail your stops orders (if you choose to use a trailing stop order).Â By writing down what youâ€™re going to do beforehand will help you stick with your original plans for the trade.Â Sometimes your emotions will get the best of you when youâ€™re trading, thatâ€™s why itâ€™s better to write down your plan of action beforehand.Â Donâ€™t let the ups and downs of the market affect your overall game plan.Â Unless the market conditions that led you to place your trade change, never abandon your original trading objective.
â— Always Place Protective Stop Orders. Make sure these orders are placed in good sound places in the market that make sense (i.e. . If you swing trade or short term trade off the 30 minute and or 60 minute charts, never risk more than 60 pips per contract on any single trade.Â Â If you are a day trader, never risk more than 15 pips per contract on any single trade. â€“ all taught earlier).Â Always physically place your initial stop loss order at the same time you enter the market.Â Be sure to move your stops accordingly as the market moves in your favor (i.e. breakeven order, trailing stop order, or use a profit target).Â Therefore, limit your risk and preserve your capital. Very important:Â Always Admit That Youâ€™re Wrong. Donâ€™t fall in love with a trade. If you get it wrong, admit it and get out and wait for another trading opportunity.Â Oftentimes traders stick with a trade simply because they canâ€™t admit that theyâ€™re wrong.Â This is one of the biggest mistakes you could ever make.Â You WILL get blown out of this business if you continually make this mistake of not placing your initial stop loss the same time you put on a trade.Â Everyone makes this mistake once or twice, but try to correct it from the start if you want to last in this business.
â—Â Trade Only What You Can Afford To Lose. The disclaimers are everywhere, youâ€™ve seen them.Â Trading can be risky if you donâ€™t know what youâ€™re doing — but so is any type of trading or business if you donâ€™t know what youâ€™re doing.Â Itâ€™s not wise to fund your trading account with money you canâ€™t afford to trade with.Â If youâ€™re trading with money you canâ€™t afford to lose chances are you wonâ€™t succeed because your emotions will get too involved â€“ you must separate your emotions from your trading (see Avoid Your Emotions).
â—Â Know What Youâ€™re Doing Before You Act. Knowledge and practical experience in the markets are the most beneficial teachers.Â Although without the proper education before trading can literally stop you in your tracks right from the start.Â Thatâ€™s why you must find someone who has been doing it successfully and model their success â€“ their trading strategies & techniques, etc.Â â€“ a company like Trading Concepts, Inc. for example.Â See the paragraph entitled, â€œLearn From Role Modelsâ€.
â—Â Donâ€™t Put All Your Eggs In One Basket.Â One of the keys to success in trading is diversification.Â If youâ€™re a day trader you shouldnâ€™t be trading more than a few currency pairs at a time.Â Master one or two currency pairs, like the EURUSD and or the EUR/JPY as examples , and then when you start making money on a consistent basis you can venture into other currency pairs.Â Start off small and concentrate and focus on a few currency pairs until you master them.
â—Â Always Know Your Place. You can NOT control the markets.Â They will move regardless of what you want it to do â€“ period.Â It is inevitable that hope, greed and fear will cloud your vision and cause emotionalÂ responses detrimental to your trading, thatâ€™s why you must master your emotions (see Avoid Your Emotions).
â—Â Never Try To Pick Tops Or Bottoms. This is not easy for anyone to try and do.Â Itâ€™s much better to find the TREND and enter at logical levels into the trend.Â Most beginners try to pick highs and lows using what they think are some â€œmagical indicatorsâ€.Â Our suggestion to you is to avoid trying to do this.Â Unless youâ€™ve got a few years trading experience under your belt, simply leave this alone.Â You really have to be quick and nimble in attempting to pick highs and lows.Â Only with the proper training and experience would we ever suggest doing this.Â Even then itâ€™s difficult.Â So, find the trend (i.e. according to â€˜Trend Determinationâ€™ â€“ as taught in this Program) and enter at logical levels â€“ youâ€™ll be more successful â€“ we guarantee it.
â— Only Trade The BEST Chart Patterns & Formations. If youâ€™re unsure of a trade set-up, chances are the trading pattern isnâ€™t crisp and clear enough to risk any money.Â If youâ€™re not sure of a trade, stay out and wait for a better trading opportunity.Â Do Not Overtrade and wait for the absolute BEST trade set-ups possible (try not to trade more than 5 currency pairs at one time).Â In fact, trade as little as possible and only take those trades that are setting up the BEST – remember, look for only the BEST Trading Opportunities!
â— Be Patient and Disciplined In Your Trading Approach. Patience is a virtue, especially when it comes to the trading business.Â If you are not patient, the markets are sure to get the best of you.Â Waiting for those special opportunities to make money is what this business is all about.Â Discipline will help prevent you from shooting from the hip and help you stay with a plan of action (i.e. as taught in the Trading Concepts â€˜FPMPâ€™..Â Discipline will also help you in becoming consistent in your trading approach, which is very important in this business.Â Like in any other business, both Patience and Discipline is a must.
â— Act On Your Decisions. Once youâ€™ve decided what to do – If you hesitate too long, chances are youâ€™ll miss a good trade opportunity.Â The key ingredient in becoming successful is being able to act on what you see.Â You will never make money by standing on the sidelines.Â Have a mind of your own and donâ€™t rely on anybody else for your trading decisions.Â
â—Â Avoid Your Emotions when trading.Â Your emotions can be your greatest enemy.Â When trading, your emotions must be under control and must be ignored.Â Do exactly what youâ€™re supposed to do without your emotions altering your decisions too much.Â Sometimes this can be difficult to do, but when youâ€™ve mastered this youâ€™ve truly overcome a major hurtle in your pathway to success in trading. You must also spend some time developing yourself – self control, patience, discipline and a positive mental attitude (PMA), to name just a few.Â An important aspect of successful trading is the trader, not necessarily the trading methodology (though that helps a great deal).
â—Â Donâ€™t Ever Lose Sight Of Your Goals. Always have a goal.Â Remember, this is a BUSINESS, not a game.Â If you want a game, go to Las Vegas and play the slot machines.Â Your main goal in trading/investing is to make money.Â Therefore, you must treat this business like any other business.Â Donâ€™t ever trade for the sake of trading, or for the thrill and excitement alone, but rather based upon sound reasons.Â Always have a sound reason for putting on a trade.
â—Â Take A Break Once In A While. Trading can definitely be stressful and if itâ€™s done every day, you can become tired and your judgment will start to dull.Â When this happens you are bound to start losing money.Â It makes sense to take a break every now and then and do something completely unrelated to trading.Â This will help sharpen your trading skills and help give you a new market outlook.Â Everyone needs a break from what theyâ€™re doing now and again, especially if youâ€™re a trader.Â Â Â
â—Â Take This Business Nice & Slowly. Donâ€™t rush into anything, there is no big hurry to run out and start trading right away.Â I would suggest spending time each day studying and/or watching the markets to help get you familiar with them.Â You must be successful on paper before even thinking about trading real-time.
Even though some of these steps may seem obvious, most traders fail to realize the importance of these guidelines and procedures. The actual impact these guidelines will have on your bottom line trading results are truly staggering.Â Without implementing these trading guidelines and procedures â€“ we can almost guarantee failure.Â We highly suggest not only getting to know the above mentioned trading guidelines and procedures, but implementing them in your trading/investing.
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