Trading Rules

Trading Rules – 5 Steps for Successful Trading

There are five rules that every successful trader follows whether they realize it or not. Regardless of the type of trading, these rules apply to each and every investor. This article will discuss these steps at a very high level with additional articles to come that provide more details regarding each step.

The first step  includes the ability of the investor to create a trading system that gives them a slight edge over the market. To have this edge means you must find your trading niche. This niche should correspond with your personality and your strengths as a person. Yes as a person, and not just as a trader. Believe it or not your strengths as an individual will come out as you trade the stock market, as will your weaknesses. That is why it is very important to first determine your strengths, and then incorporate these strengths into your trading. You will find that you will naturally navigate towards markets that suit your personality.

The second step includes the development of a clear and simple trading plan. This is one of the most important steps and is unfortunately also one of the most frequently skipped steps. You must create a master trading plan in order to remove as much trading anxiety as possible from your trading. You will never remove all emotion, nor would you want to, but the more solid your plan is, the more confident you will feel, and the better you will trade. There are a dozen steps necessary to developing a master trading plan however in this article I will address two additional that are actually considered two of the five trading rules. Let’s explain.

The third step is that you must cut losers and ride winners. That’s obvious right? Well, the fourth step is that you must be disciplined and follow the procedures that you have mapped out in your master plan. These two steps go hand-in-hand for the mere fact that in order to cut losers and ride winners, you must be able to observe and determine what is a loss (in your book), and what is a win? This is all a part of developing and following your plan. A wonderful tool used by many successful stock traders to accomplish these steps is a trading journal. This tool alone helps you to develop the discipline needed to improve your trading skills. It also helps the emotional trader to be accountable for their actions through the measuring and recording of how they felt during a trade. This accountability leads to better emotional control and discipline.

The last step is to develop the skills necessary to enjoy trading stocks and to enjoy your life! To do this you must tap in to the power of your subconscious mind. Your cognitive biases and beliefs will ultimately determine how you act when you trade. For example, if you are one of those people who always have to be right, then accept it but be aware of this bias because it has the potential to seriously affect your ability to make rational decision. You don’t have to change initially, just the mere acceptance and recognition of it will make you more alert to the fact that this bias could stop you from trading to your full potential. When you monitor your behavior when you trade, you will ultimately improve your profits and enjoy trading! The more you enjoy what you are doing to support your family and lifestyle, the more you will ultimately enjoy your life.

The information contained in this article is only a brief synopsis of the trading rules needed to master the stock market like a genius trader. The Genius Trader provides the tools needed to develop successful rules. You will find these tools easy to incorporate into your daily trading routine. Listen to my free  podcasts and learn to control your emotions.

Below is a video that explains how to use the US Dollar Index to trade currencies profitably