Rules are around us every day. From the type of food we eat to the way we drive to what we wear to work – and some of those rules are pretty silly. Or so we think. But, bear in mind that behind every rule is a reason and just because we might not be able to see what that reason is, it doesn’t mean that the rule is pointless. When it comes to trading, the rules are essential. Follow the rules of trading and you’ll discover that it really can change your life.
Understanding Your Strategy
The first rule of trading is to understand what your strategy is. Many people just go into trading without putting a strategy in place at all, and that can only spell disaster, even if ‘beginner’s luck’ is there at the start. Trading without a strategy has a name – it’s called gambling. But for those who really want to make something of and out of their trades, it’s time to follow the rules of trading, and that means not only putting a strategy in place, but understanding it, and following it to the letter. Getting this important part of trading right takes time and effort, but once it is done it will be worth every second you put into it.
Take Your Money Seriously
By all means, follow the rules of trading and we hope you have great success. But if you can’t afford to make a trade (that is, you can’t afford to lose the money, because there is always a chance that any trade can be a losing one) then don’t. Just don’t. Having money to pay the mortgage, make the rent, buy food… that’s important. And if by losing the trade you wouldn’t have the funds to make your important monthly obligations then it is time to step away. Be honest with yourself and if you are in debt and/or seriously cannot afford to lose any money, don’t take the risk.
Listen To Yourself
Gut instinct has a lot to say for itself. There is so much about the mind, body and whatever the soul might actually be that we can’t ever discount anything really. And gut instinct – that feeling you get about a situation, whether it’s good or bad – should never be discounted in trading. Follow the rules of trading and listen to your own head and heart. Follow your own strategy that you know to be right. And please, please, don’t listen to pundits or tipsters who are convinced they know more than you do. Do they? Do they really? Think about it. They have no idea what your strategy is or why it works for you, so they can’t possibly know what trade is the best one for you to get into. The tips these people offer are just their opinion. Well, you have your own opinion. Sometimes it will match theirs, and sometimes it won’t. But go with what you want, not what someone else is telling you.
Don’t Look Back
If you are keen to follow the rules of trading, don’t look back. Really. Don’t keep thinking about past errors or losses as this will reduce your confidence on your ability to understand your strategy and trade with it. Equally, don’t look back on your past wins either – this could make you over-confidence and liable to take risks that you wouldn’t have done otherwise, just because you were sure you couldn’t lose. Trading is a balancing act, and there is a fine line between going too far either way. The key is not to let your emotions get in the way of a trade. Professionals don’t. They don’t get angry, sad, ecstatic over trades. They just keep plugging on.
Lose
That’s right. To follow the rules of trading you need to lose. Not all the time, of course, but it’s going to happen. It’s an inevitable part of trading. You simply cannot avoid it. But you can – somewhat – manage it. That means that you won’t lose as much money as you might otherwise have done. Great!
Don’t Forget To Be Excited!
We know we said earlier about keeping your emotions in check, and we’re not saying that you need to jump up and down with excitement, but what we do want is for you to enjoy what you’re doing. Follow the rules of trading and don’t make it all about the money – be the best trader you can be, and the money will follow.
Rob Colville
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