RULE # 1: USE MONEY YOU CAN AFFORD TO LOSE
If you are trading with funds…
You need for some family projects, you are doomed to failure.this is because you wont be able to enjoy the mental freedom to make sound trading decisions.
Your trading funds should be viewed as money you are willing to lose, your position should be carefully analysed so you don’t jeopardize other funds or assets.
One of the keys to successful trading is mental independance.
You have got to trade outside influencing factors and that means your trading freedom must not be influenced by the fear of losing money you really have earmarked for a specific need.
RULE # 2: KNOW YOURSELF
You need an objective temperament, an ability to control emotions and carry a position without losing sleep. Although trading discipline can be developed, the successful traders are unemotional about their positions.
There are many exciting things happening in the market everyday so it takes a hard nosed type of attitude and an ability to stand above short term circumstances. If you do not have this attitude you will be changing your mind and your positions every few minutes.
RULE # 3: START SMALL
Test your trading ability by making paper trades, then begin to trade small amounts of money.
Beginning traders should learn the mechanics of trading before graduating to more volatile assets (eg: the EUR/GBP aka “The Dragon” or GOLD)
RULE # 4 DO NOT OVER-COMMIT
One rule of thumb is to keep three times the money in your account than is needed for that particular position.Reduce your position size if necessary to confirm to this rule at a minimum. This rule helps you avoid trading decisions based on the amount of money in your account.
If you are under margined you may be forced to liquidate a position early at a costly loss that could have been avoided.
RULE # 5: ISOLATE YOUR TRADING FROM YOUR DESIRE FOR PROFIT.
Do not hope for a move so much that your trade is based on hope. The successful trader is able to isolate his trading from his emotion. Although hope is a great virtue in other areas of life, it can be a real hindrance to a trader.
When hoping that the market will turn around in their favor beginners often violate basic trading rules.
RULE # 6: DO NOT FORM NEW OPINIONS DURING TRADING HOURS. PRE PLAN YOUR TRADE.
Decide upon a basic course of action, then do not let the ups and downs during the day upset your game plan.
Successful traders prefer to formulate a basic opinion before the markets open, then look for the proper time to execute a decision that has been made.
When a trader Completely Changes his direction during the trading day it can confuse him and may result in generating lots of commissions for the broker with little in the way of profits for you
RULE # 7: TAKE A TRADING BREAK
Trading everyday begins to dull your life and relations with your family members.
A trading break helps you take a detached view of market and tends to give you a fresh look at yourself and the way you want to trade for the next several weeks. So take some time off and spend it with your loved ones.
A break also helps you see the market factors in a better perspective.
RULE # 8: WHEN YOU ARE NOT SURE, STAND ASIDE.
Do not feel that you have to trade everyday, or even hold a position everyday. The beginning trader is tempted to trade or hold a position everyday , the successful traders develop patience and discipline to wait for an opportunity. After they have taken a position and begin to feel uncomfortable, successful traders either reduce the size of the potion or liquidate.
RULE # 9: LEARN TO LIKE LOSSES.
This rule says just the opposite of what many traders think. Learn to like losses because they are part of the business.
When you gain the emotional stability to accept a loss without it hurting your pride, you are on your way to becoming a successful trader.
The fear of taking a loss must be removed before you become a good trader.