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Thread: Trade! Trade!! Trade!!! Trade with Rules

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    Bullish fxria's Avatar
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    Thumbs up Trade! Trade!! Trade!!! Trade with Rules

    Traders have developed lots of rules over the years in an attempt to refine the way they make trading decisions. So its not hard to come up with a list of 10 trading rules that can be part of a trading plan. Some are generic and general and not exclusive to any particular trader or trading approach. Others can be very precise as traders tweak rules into their trading system. The rules below have been selected for their broad appeal to many types of traders. They are presented in no particular order of importance.

    1. Dont trade markets about which you know very little.
    This is not to imply that you have to be a fundamental expert on every market you wish to trade. However, you should know about what fundamentals are impacting, or could impact, a market you are contemplating trading. For example, a person who has only traded grains would not want to jump right into a Treasury Bond futures trade without first doing a bit of homework on how the bond market trades price increments (dollar amount per tick), trading hours, on what exchange the market trades, etc.

    A trader could pick up a Wall Street Journal and read the Credit Markets section for a week or so to become familiar with fundamental factors that influence the bond market. Also, consider this: Most traders enjoy the process of trading. If they did not, they would likely just hand their money over to a fund manager and give the manager discretionary control over their money. Learning and knowing what fundamental factors are impacting or could impact a market that a trader plans to trade is part of the process (enjoyment) of trading.

    2. Dont trade hot tips.
    You may trade for 20 years and never hear a good trading tip. Reason: There arent any . . . at least not any that are any good for regular individual traders. Markets are way too big and too tightly regulated to be impacted by any tips or inside information. Any legitimate early information has almost certainly already been factored into the market price structure by the time most individual traders could ever benefit from it.

    Dont confuse tips with rumors. Markets do move on rumors more than just occasionally. Rumors are a part of trading but still fall into the category of not much use to off-floor traders. Besides, many rumors are never confirmed as fact and are often self-serving to those who try to start them.

    3. Dont get too fancy with your market orders.
    Entering a trade at the market with a market order may be the best way to enter a trading position, especially in markets that are liquid (have high open interest). Its certainly the easiest way to enter. Fiddling around with limit or stop-limit or other multi-step orders to save a tick or two or three can cost a trader a good entry point or even a missed trade altogether.

    Its certainly easy to be guilty of this offense because every trader is always trying to get just a little better price. This doesnt mean that limit or stop-limit or other types of orders are not useful in certain circumstances because they are. However, most trade entries are best made at the market. Look at pitchers in major league baseball who nibble with their pitches around home plate. Most wind up with a walk instead of an out.

    4. Dont form a new market opinion during trading hours.
    This rule goes hand in hand with the rule that says you need to stick to your trading plan of action. Day-to-day market noise, or the minor up-and-down price fluctuations of a market, can be at least distracting to a trader and at most prompt the trader to make a hasty and poorly founded trading decision.

    5. Dont force trades; if you dont see a trade, stand aside.
    Dont chase a market just to put on a trade. Try to exhibit patience and discipline in trading easily said but hard to follow. Patience and discipline are not easy virtues for any trader to learn because a typical futures trader has a Type A personality with a competitive nature who hates to wait in lines. However, to have even a chance at success in trading, you have to control your impatience. If you happen to miss a trading opportunity because you waited too long, other trading opportunities will come along.

    A good trade is usually profitable right from the beginning. If the market price moves your way in the first couple days after youve executed the trade, then odds are significantly higher that your trade will be a winner if you have waited patiently for the right position. This rule reinforces the notion that tight protective stops are an important part of trading success. But there is a time to be impatient: If a straight futures trade is under water after two or three days, more times than not its prudent to take a small loss and move on. Do not be patient with losers.

    6. Use intermarket analysis to spot trading opportunities.
    No market trades in isolation but is influenced by what is happening in a number of related markets. Dont focus on just one market as much of todays single-market technical analysis does. Instead, take into account developments in other markets that are likely to affect prices in your target market. If you trade stock indexes, you have to be aware of what is taking place in interest rate, currency and commodity markets such as gold. The price of a market you want to trade may be the sum of what is happening in ten or more interrelated markets.

    7. Watch open interest statistics, especially in options.
    When you are contemplating trading any contract, make sure to first check the open interest for that specific contract or strike price. If a futures contract or options strike price has a low open interest total, it is probably best to seek out a more liquid contract. Fills on both entry and exit can be tough and may produce more slippage than is desired. When you get into a position, be sure it is liquid enough so you can get out on favorable terms.

    8. Know what you can and cannot control.
    You can control the market you want to trade. You can control the type of market order you want to give your broker. You can control when you want to enter the market. You can control the amount of contracts you wish to trade. You can control when you want to exit the market.

    But you cant control the market, which often has a habit of doing unusual and unexpected things. Knowing and prudently managing the market factors you can control and knowing that you cannot control the market gives you a trading edge.

    9. Make the markets action confirm your opinions.
    If you have a particular market on your radar screen for a trade, dont just jump in based on a hunch or a gut feeling or because you want to get a fill right away. Thats when a market order advised above may not be in your best interest. Make the market first confirm your opinion. Make the market show you some strength if you want to be long, or make it show you some weakness if you want to be short.

    10. Do not overtrade.
    Trying to trade too many markets or too many contracts in one market can create problems for an undercapitalized trader. There is no set rule for how many markets a trader should trade at one time. Some traders can trade many markets at the same time and not have a problem. However, if you are feeling stress about a position you are carrying or cant keep up with whats going on in all the markets you are trading, then you are likely over-trading.

    For those traders who are really not sure how many markets to trade at one time or how many contracts to trade for each position, its always better to take a conservative approach. Step in slowly until you become comfortable trading in a larger size or in multiple markets.

  2. #2
    In Profit acidguy's Avatar
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    i could say dont overtrade in the middle of a trend.

    but some times is nice to overtrade in areas on oversold or overbought status.
    they can be great winners
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    Quote Originally Posted by acidguy View Post
    i could say dont overtrade in the middle of a trend.

    but some times is nice to overtrade in areas on oversold or overbought status.
    they can be great winners
    well said
    exactly looking at the overbought and oversold zones with pivots trading seems a profitable overtrading method for me..
    [url=http:Rule 14

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    In Profit richtrader's Avatar
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    Default Self-Sabotage Revealed

    In my peak performance training with traders, I give a strong psychological slant to the concept of self-sabotage. Self-sabotage typically occurs when one lacks the discipline to act in one's own best interest. For example, when you have dessert, knowing it's taboo because you are trying get healthy, you might call that self-sabotage. Or perhaps you know you need to exercise and you really feel good when you do so, but somehow you just feel lazy and want to skip the exercise period. Self-sabotage occurs in trading in many instances:

    When you know you should follow the ten tasks of trading, but you don't.
    When you know you need to determine if your system will really work, but you just trade it anyway.
    When you know you should develop a business plan for your trading, but somehow that just seems like too much work.
    When you know you need to put a stop loss order in on a trade, but you don't.
    These and numerous other examples characterize self-sabotage. And these examples of self-sabotage typically occur when you have internal conflict between various parts of yourself and when emotions pop up that result in behavior that is not in your best interest and when you just avoid doing what's important for success.

    Many traders, however, avoid thinking about self-sabotage in this manner because they don't like to go inside of themselves to see what is going on. They prefer to think technically about systems rather than notice what their beliefs are and whether or not they are useful. As a result of this tendency, I've developed another definition of self-sabotage that everyone can relate to: repeating the same mistake multiple times.

    My definition of a mistake is when you don't follow your rules. And if you don't have rules, then everything you do is a mistake. And self-sabotage occurs when you keep repeating the same mistakes over and over and over again.

    For example, you don't raise your stop when the market makes a new high. When you skip it once, and your rules say you must do it, then it's a mistake. When you do it three times in the same week, then it is self-sabotage. When you develop this attitude, can start keeping track of your mistakes and see how much they cost you.

    For example, suppose you are about to be stopped out for a 1R loss. (The definition of a 1R loss and R-multiples in general is explained in my book Trade Your Way to Financial Freedom and there is a brief description in my Tharp Concepts section of the website.) You don't want to be stopped out, however, so you cancel the stop which is your mistake. The position keeps going down and eventually you get out with a 3R loss. That mistake cost you 2R (i.e., instead of a 1R loss you got a 3R loss).

    Now suppose you have a system that makes you 100% per year. However, you make a 2R mistake each week. At the end of the year, instead of being up 100%, you have lost money just because of your mistakes. Now can you begin to understand how trading reflects your behavior and that one of the critical things that you must do as a trader is to eliminate mistakes.

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    "Trade with rules, no with emotions!"

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    Bullish soumyakhatri's Avatar
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    Nice trading!! And relatively stress fee. My two GJ trades today were very stree free. It was as though I was following the price and I took profits on the first sign of a retrace.

    Everyone has their own way to determine the trend. My current approach is to company M5 and M5 and make sure that price is on the same side of gann. I'monly looking for M5 trend.
    Regards
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    Contact me at:[email protected]
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    "5. Don’t force trades; if you don’t see a trade, stand aside."
    waiting waiting waiting

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    Bullish fxtrader77's Avatar
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    Don’t force trades; if you don’t see a trade, stand aside.
    Don’t chase a market just to put on a trade. Try to exhibit patience and discipline in trading – easily said but hard to follow. Patience and discipline are not easy virtues for any trader to learn because a typical futures trader has a “Type A” personality with a competitive nature who hates to wait in lines. However, to have even a chance at success in trading, you have to control your impatience. If you happen to miss a trading opportunity because you waited too long, other trading opportunities will come along.



    this is the most important part
    i cannot wait unfortunelly

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    Nice strategy but so complicated and risky I think.

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    do not force a trade when u do not see a reason to enter one

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