THE GENERAL TRADING RULES. (TRADING PLAN)

MANY TRADERS STARTS TRADING WITHOUT ANY PLAN. SOUNDS UNBELIEVABLE BUT IS UNFORTANLY THE TRUTH.

PLAN:

•           WHERE YOU WANT TO ENTER A TRADE ?

•           HOW MUCH MONEY YOU ARE GOING TO RISK ?

•           WHERE YOU ARE GOIUNG TO GET OUT IF YOU ARE WRONG ?

•           WHERE YOU ARE GOING TO TAKE PROFITS IF YOU ARE RIGHT ?

•           KNOW HOW MUCH MONEY YOU ARE GOING TO MAKE IF YOU ARE RIGHT ?

•           NEVER TRADE WITHOUT A PROTECTIVE STOPLOSS !

RULE: DONT TRADE WITHOUT A TRADE PLAN !

MONEYMANAGEMENT

CREATE FIXED RULES HOW MUCH MONEY YOU WANT TO RISK PER TRADE AND STICK TO YOUR RULES. DONT USE A RISK FROM MORE THEN 5% PER TRADE !

RULE: USE MONEYMANAGEMENT !

PROTECTIVE STOP LOSS

ALWAYS PLACE A STOPLOSS WITH THE INITIAL ORDER. NO MENTAL STOPS! MANY TRADERS SAY: „I USE MENTAL STOPS" AND CHANGE THEM MENTAL WHEN THE MAR­KET GOES AGAINST THEM. WITH A MENTAL STOP, AS SOON AS THE MARKET HAS GO­NE THROUGH YOUR STOP LOSS PRICE, YOU WILL NO LONGER ACT ABSOLUTELY RATI­ONAL. NOW, YOU ARE MOST LIKELY TO MAKE A DECISION BASED ON FEAR, GREED AND HOPE.

RULE: NEVER TRADE WITHOUT A FIXED PROTECTIVE STOP ! TAKING LITTLE PROFITS AND LETTING YOUR LOSSES RUN

A MAJOR MISTAKE FROM TRADERS IS TAKING SMALL PROFITS AND LETTING LOSSES RUN. RESULT FROM HAVING NO TRADE PLAN.

AFTER ONE OR TWO LOSING TRADES, YOU ARE LIKELY TO TAKE SMALL PROFITS ON THE NEXT TRADE EVEN THOUGH THAT TRADE COULD TURNED INTO A LARGE WINNER.

RULE: CUT LOSSES AND LET WINNER RUN !

AVERAGING UP/DOWN

IN FOREX WITH A LEVERAGE FROM 100:1 OR GREATER, AVERAGING A LOSS CAN BE DISASTROUS FOR YOUR ACCOUNT.

A TYPICAL APPROACH IS THAT AFTER YOU WENT LONG AND THE PRICE DROPS DOWN; YOU MIGHT FIGURE THAT IT WAS A GOOD BUY THEN, IT IS A BETTER NOW.

YOU MAY JUSTIFY AVERAGING DOWN BY FIGURING YOU WILL HAVE A LOWER AVERA­GE PRICE AND REQUIRE A SMALLER MOVE TO BREAK EVEN. UNFORTANLY, YOU WILL LOSE TWICE AS MUCH IF THE MARKET CONTINUES AGAINST YOU.

RULE: NO AVERAGING UP AND DOWN !

OVERTRADING

TO MUCH OPEN TRADES WITH TO MUCH RISK IS A CLASSICAL EXAMPLE FROM O­VERTRADING. OUR RULE IS TO HAVE ONLY 3 POSITIONS (MAX) OPEN AT ONE TIME. THIS GREATLY LIMITS ANY POSSIBLE OVER TRADING.

NOTE: OVERTRADING IS THE QUICKEST WAY TO BLOW UP YOUR ACCOUNT.

RULE: NO OVERTRADING ! NOT

HAVING PATIENC

YOU TRADE TO MAKE MONEY, RIGHT ? YOU DONT GET MONEY TO ENTER AS MUCH TRADES AS POSSIBLE. CHOOSE THE BEST TRADING SETUPS AND WAIT PATIENT WHI­LE THEY COME UP. IST SOMETIMES BETTER NOT TO TRADE THEN TO TRADE AND LOSING MONEY.

RULE: BE PATIENT ! DISCIPLINE

IT HAS BEEN OUR EXPIERENCE IN TRADING FOREX AND HELPING NEW AND SEASO­NED TRADERS, THAT THE GREATEST CAUSE OF LOSSES IS THE ABSENCE OF SELF DIS­CIPLINE.

TRADER NEED A LOT OF SELF DISCIPLINE !

THE BEST WAY TO TRAIN YOUR DISCIPLINE IS MAKE YOURSELF WATCH THE MARKET FOR A WHOLE WEEK WITHOUT DOING ONE TRADE. EVEN IF THE PERFECT TRADE CO­MES UP DONT DO ANYTHING. THIS WILL PROVE YOURSELF THAT YOU HAVE DISCIPLI­NE TO BE PATIENT AND NOT TO TRADE.

RULE: BE DISCIPLINED!

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