MUST TO FOLLOW DOs & DON’Ts for Success in Trading
- Plan the trade and trade the plan.
- Put the STOP LOSS in the system and not in your mind (OR) Hedge your trade.
- Before entering into trade ask yourself whether you are TRADING or GAMBLING?
- You must know your ENTRY, STOP LOSS and TARGET points before entering into any trade.
- Never chase the price, you will always be able to find another good opportunity.
- Never force yourself into trade; be patient, it is okay to sit on the cash rather than forcing yourself into wrong trade.
- Never overtrade, and be a discipline trader.
- Leverage is a double edged weapon, use it for your advantage and not for blowing off your trading capital.
- Never execute your emotions, execute your trading plan.
- Do not hesitate to take losses when your trade goes in other way.
- Never let the profit making trade to go into losses.
- Bring stop loss forward as soon as your trade get into decent profits.
- Use trailing stop loss when you want to ride the trend.
- Use the Money Management Rules.
- Never break the rules that you have set for yourself and for your trading success.
- Forget the news, remember the chart. You’re not smart enough to know how news will affect price. The chart already knows the news is coming.
- Buy at support, sell at resistance. Everyone sees the same thing and they’re all just waiting to jump in the pool.
- Don’t chase momentum if you can’t find the exit. Assume the market will reverse the minute you get in. If it’s a long way to the door, you’re in big trouble.
- Trends test the point of last support/resistance. Enter here even if it hurts.
- Trade with the TREND not against it. Don’t be a hero. Go with the money flow.
- Remember TREND IS YOUR FRIEND UNTIL IT BENDS.
- Avoid the open. Give at least a 15 mins for the market to find its own direction before you enter into trade.
- Don’t take any Intra day trades after 2.30 pm.
- Never carry intraday trade to next day.
- Bulls live above the 200 day, bears live below. Sellers eat up rallies below this key moving average line and buyers to come to the rescue above it.
- Price has memory. What did price do the last time it hit a certain level? Chances are it will do it again.
- Trends never turn on a dime. Reversals build slowly. The first sharp dip always finds buyers and the first sharp rise always finds sellers.
- Bottoms take longer to form than tops. Greed acts more quickly than fear and causes stocks to drop from their own weight.
- Beat the crowd in and out the door. You have to take their money before they take yours, period.
- Don’t trust others opinions – It’s your money at stake, not theirs. Do your own analysis, regardless of the information source.
- Don’t break your rules – You made them for tough situations, just like the one you’re probably in right now.
- Don’t try to get even – Trading is never a game of catch-up. Every position must stand on its merits. Take your loss with composure, and take the next trade with absolute discipline.
- Don’t believe in a company – Trading is not investment. Remember the charts and forget the press releases.
- Don’t seek the Holy Grail – There is no secret trading formula, other than solid risk management. So stop looking for it.
- Don’t forget your discipline – Learning the basics is easy. Most traders fail due to a lack of discipline, not a lack of knowledge.
- Don’t trade over your head – Concentrate on playing the game well, and don’t worry about making money.
- Don’t chase the crowd – Listen to the beat of your own drummer. By the time the crowd acts, you’re probably too late…or too early.
- Don’t ignore the warning signs – Big losses rarely come without warning. Don’t wait for a lifeboat to abandon a sinking ship.
- Don’t join a group – Trading is not a team sport. Avoid acting on messages, flashes and financial TV. Your judgment may be more correct than all of them put together.
- Don’t have a pay check mentality – You don’t deserve anything for all of your hard work. The market only pays off when you’re right, and when your timing is really, really good.
- Don’t ignore your intuition – Respect the little voice that tells you what to do, and what to avoid. That’s the voice of the winner trying to get into your thick head.
- Don’t hate losing – Expect to win and lose with great regularity. Expect the losing to teach you more about winning, than the winning itself.
- Don’t fall into the complexity trap – A well-trained eye is more effective than a stack of indicators. Some time Common sense is more valuable than a complex set of indications.
- Don’t confuse execution with opportunity – Overpriced software won’t help you trade like a pro. Pretty colors and flashing lights make you a faster trader, not a better one.
- Don’t project your personal life – Trade with the capital that you can afford to lose.
- Trading is a serious BUSINESS, Don’t think its entertainment – Trading should be boring most of the time, just like the real job you have right now.
- Never risk more than 2 to 5% of your trading capital in one trade.
- Never trade with HOPE, GREED and FEAR. These are killers in Trading profession.
- Just because you entered into wrong trade market or God will not listen to your prayers or hopes.
- Don’t expect market to listen to you; instead you listen to the market.
- Make sure your TRADING COSTS are less. Never pay high BROKERAGE.
- Choose your BROKER (multiple brokers) based on your trading style.
- Cut the losses immediately and let the profits run.
- Thrill seekers usually lose. Be a planned and disciplined trader.
- Don’t trade on rumours. It’s a gambling.
- Never add to a losing position. Stay out of trouble, your first loss is your smallest loss.
- Analyze your losses. Learn from your losses. They’re expensive lessons; you paid for them. Most traders don’t learn from their mistakes because they don’t like to think about them.
- If you’re just getting into the markets, be a small trader for at least a year, then analyze your good trades and your bad ones. You can really learn more from your bad ones.
- Always record your trades in tracking sheet and review your trades periodically (at least once in a month).
- NEVER FORGET THESE DO’s and DON’Ts.
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