A: RULES FOR TRADING
- Buy the first pullback from a new high. Sell the first pullback from a new low. There’s always a crowd that missed the first boat.
- 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 TICK not against it. Don’t be a hero. Go with the money flow.
- Emotion makes many Traders hold a loser too long. Many Traders don’t discipline themselves to take small losses and big gains.
- Greed causes some traders to allow profits to dwindle into losses while hoping for larger profits. This is really a lack of discipline. Also, having too many Trades on at one time and over trading for the amount of capital involved can stem from greed.
- Over trading is dangerous, and often stems from lack of planning.
- Price has memory. What did price do the last time it hit a certain level?
- Trend never turns on a dime. Reversals build slowly. The first sharp dip always finds buyers and the first sharp rise always finds sellers.
- Too many Traders do not apply money management techniques. They have no discipline, no plan. Many also overstay when the market goes against them, and won’t limit their losses.
- Beat the crowd in and out the door. You have to take their money before they take yours.
- 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 absolute discipline.
- Don’t Trade over your head- If you last name isn’t Buffet or Cramer, don’t Trade like them. Concentrate on playing the game well, and don’t worry about money.
- 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 chase the crowd-Listen to the beat of your own drum. By the time the crowd acts, you’re probably too late or to early.
- Don’t Trade the obvious- the prettiest patterns set up the most painful losses. If it looks too good to be true, it probably is.
- 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 count your chickens- Profits aren’t booked until the Trade is closed. The market gives and the market takes away with great fury.
A Job to be Serious About
You wake up, feed the dog, feed the kids, and drive to work. This routine is performed ev
ery day of the week by millions of people. Why wouldn’t you do the same with your day Trading business?
The purpose of this section is to make you think of day trading as a job. The work bell rings at
9:30AM, so don’t be late. If you are in your pyjamas or robe, get dressed before you begin work. Get into a routin
e. Be a professional. Feel like and act likes a professional. You have thousands of dollars on the line. This is job to be serious about. This is a CEO’s income you’re making.
Another important point is to be thankful every day before you trade. Be thankful for your health, family, loved ones, etc. Be humble as you start the day. Start the day fresh and feeling good, not anxious and upset and angry at life. These feelings will cloud your judgment and are counterproductive. Start the day well, and you will have a good day. As you begin feeling more comfortable about the methods we are teaching you, you will see that waking up with a positive outlook is a great feeling.
Don’t get overconfident in day trading. Stay on track, and follow the rules.
Yes, all the money you want can be found day Trading. This is a true statement. You can be financially free, like the ads claim.
But don’t let the money you make give you a feeling of invincibility. we say this because we have made hundreds of thousands of dollars. Then we start deviating from our plans, and we lose more than we are supposed to. Up today and down tomorrow is not the purpose of day trading. This is a daily business. Keep on track. Remember that curiosity killed the cat. Don’t put your money or trade unless you follow the rules.
In day Trading, so many people start to make money, get cocky, and by the time they realize it, they have lost everything. Don’t let this be you. These pitfalls will devastate your account. We are only speaking from experience. In the end, “should have, could have” does not bring our money back from the grave. Again, follow your plan, be humble, and stick to your plan. Listen to no one. If it works, just keep doing what you’re doing.