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Ten Commandments of Trading Discipline
05/17/2014 6:00 am EST
You can have the very best trading system, but without discipline, you won't succeed in trading, so Ron Wagner of RevolutionaryTrading.com has come up with ten that he's developed through years of trading experience.
These commandments of trading discipline should dramatically improve your trading success if adopted and followed. They have been developed through years of trading experience.
1) Trade free from fundamental prejudices. Hold no judgment on a stock. Don't try to rationalize a losing position, or fall in love with a winning one. A stock may have its "fundamental truths," but the "Absolute Truth" is its price.
2) Focus on proper trading strategies and not on making money. Money is merely a consequence of skill level, or lack thereof. As long as you trade with unwavering discipline, don't review prior trades with a berating "should have" mode of thinking. Both winning and losing trades should be reviewed during your journey towards trading mastery.
3) Develop a trading style that is consistent with your personality and philosophy. Trade your nature!
4) Determine the risk/reward ratio of each trade before entering. Risking the farm to make peanuts is unwise. Create the plan before the trade, and not during!
5) At times, the best action is no action. Don't search for action and think that you must trade every day.
6) Trade with the trend since stock prices flow in the direction of least resistance. If a stock goes against the trend you expected, get out. When in doubt, stay out or get out.
7) There is no room for emotions in trading. Disciplined traders can observe the market from the perspective as if they are not in a position, even when they are. Do what the market is telling you, not what you think it should do.
8) Make the market come to you. If it doesn't play "your hand in your world," step aside. Be strict, be disciplined, and be patient, and never trade when physically or mentally unfit.
9) The true battle is not with the market, but learning how to control your own emotional impulses, psychological demons, and human nature. Many internal battles of letting fear and greed interfere with logic and discipline can unfortunately result in painful losses. Keep your losses small using appropriately placed stops based on technical analysis.
10) There are no "holy grails," magic software, or short cuts to success. Professional traders never cease being students of the markets. Spend time each day developing yourself to be a better person and trader, and take responsibility for your own trades and actions.
I hope that these commandments, which myself and many Pristine-trained traders follow "religiously," will help you on your journey to becoming a master trader and investor.
By Ron Wagner, Principal Partner, RevolutionaryTrading.com
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