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5 Rules every trader should practice to be successful

Posted on January 14, 2016 06:01 pm

 
 

1.    Treat trading like a business:

o    As a hobby, trading quickly gets expensive:

o    As a job, trading can be discouraging because there is no such thing as a regular paycheck: Traders can work 10-hour days all week and end up empty handed on Friday.

o    Rather than thinking in terms of a hobby or job, it is important to approach trading as a business as trading incurs expenses, losses, taxes, uncertainty & risk.

2.    Always use a trading plan: “Plan your trade and trade your plan.”

o    The first part plan your trade is accomplished through a trading plan: A written set of rules that defines entry, exit and money management criteria.

o    The second part of the adage  trade your plan means following your trading plan exactly, without making excuses, second-guessing or otherwise deviating from the rules that were so painstakingly created. 

o    Consistently following the rules of an effective trading plan is part of what allows a trading business to make money over time. 

3.    Risk only what you can afford to lose: While traders plan on making money (that’s why people trade, after all), it is important to acknowledge that it does not always work out that way. It is essential that the money used to fund a trading account be what can be lost without impeding the ability to meet other financial obligations. Losing money is difficult enough, but it is even more so if it is capital that never should have been risked in the beginning.

4.     Accept your losses, but learn from them: Although most traders inherently focus on winning, trading is mostly about losing. In fact, successful traders think of trading not in terms of how much they can win, but how much they can afford to lose. 

Together, these rules make up general guidelines that can be used by discretionary and system traders alike. Traders who have the patience and discipline to follow these rules can increase their odds of success in the challenging and competitive business of trading.

 

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ABOUT TECHNICALTRADER 615

Technical trader is born out of passion. Passion to learn, Trade and share about Technical analysis of the Stock Markets. We all know context is the important aspect of technical analysis. The Sustenance of a big move or a breakout of a particular stock depends on the context in which the breakout is happening. As a Traders coach we teach you how to develop context and trade the stock market. Especially the Nifty and the Bank Nifty.

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