Trading Meta-Rules as arranged by Doug at http://atikokan.lakeheadu.ca/~dlampi/tradingrules.html ------------------------------------------------------------------------ Risk Control and Money Management 1. Only trade with risk capital and be aware of the risk of losing. 2. Never trade with an underfunded account. Suggested minimum - $5000 US. 3. Never overtrade; adhere to your risk management rules. a) Never risk more than 5 to 10% of your capital on any one trade. b) Never risk more than 40% of your capital on all trades combined. c) Always leave 25% of your capitol as a margin reserve. 4. Use stop loss orders based on technical support and resistance rather than a dollar based stop. Or use options for protection instead of a stop-loss. 5. Define specific risk and profit objectives before trading. 6. Reduce you trading after first loss, never increase; use percentage of capital as guide to size of trades. 7. Avoid the natural tendency toward increasing your trading after a long period of success or a period of profitable trades; use percentage of capitol as guide to size of trades. 8. Never turn a profit into a loss. Raise your stop loss so as to lock in profits. 9. Your risk should be equally distributed. Trade in two or three different commodity products and use a number of trading systems; diversify. 10. Never average a loser. 11. Add to a winner. Increase your risk exposure to the market that is going with you. 12. Never take a loss without ask 'why?' Learn from your trading mistakes. Keep a Trading Journal. -------------------------------------------------------------------------------- Price Prediction 1. Always remain true to your trading plan, and follow the trading style that works best for you. 2. Clearly identify each Mechanical and Discretionary component of your trading system. 3. Remember the "trend is your friend" (one of the Seven Secrets of The Professionals) 4. Trade in the most active markets (refrain from the slow inactive markets) and trade the most liquid contract months. 5. Strategize according to market consensus. When too many market participants are moving the market in any one direction, the market becomes very vulnerable. (Jake Bernsteins report?) 6. Determine the make-up of open interest. (Commitment of Traders Reports) 7. Let the market tell you when the trend is over by a patterned reverse in direction. 8. Declining volume usually indicates the market is not accepting higher or lower prices and could indicate a turn. There will be little volume at the extremes. 9. Clearly identify and adhere to risk parameters. 10. Have a plan for when the market moves for you or against you. Don't let emotion overcome intelligence. A good plan must have defence points (stops) and attack points (technical levels for adding more risk to a winner). -------------------------------------------------------------------------------- Psychological Trading Rules 1. Trading with a small account will unleash fear, panic and other emotions that overpower the dumb mechanical repetitious trader system needed to be successful. 2. Never trade if you are insecure of the trend. 3. When in doubt, get out. Only trade when you feel confident with your trading strategies. 4. Do not trade when you do not understand the market. Trade with confidence and conviction. 5. Never get into the market because you are anxious from waiting, and never get out of the market just because you have lost your patience. 6. Put your trust in the markets, and do not be afraid when they reach historic highs or lows. 7. Use self-discipline when the market goes against you. Take your loss and wait for another opportunity. 8. Find your personal trading niche, and remain focused. Be cautious to not overextend your attention. 9. Successful trading is about finding one winning method, pattern etc. or anything that shows a profit, then repeating it over and over without change, introspection, tweaking, or intellectualizing. 10. Look at all sides of the market. This will enable you to be more flexible, and less resistant to change. 11. Never let greed take control over your winning positions. Be aware that trading is addictive and separate mechanical trading from the adrenaline surge of having a trade going. 12. After several losses, you naturally tighten your discipline and become more conservative. Become more vigilant during periods of success to maintain disciplined trading. 13. Be flexible with your trading. This will promote your growth as a trader. Alter your plan as it suits your increasing knowledge of the markets. 14. Be ware of any directional bias; prefering to be long. Do your back-testing and have confidence in your trading system. 15. Finally, believe in yourself!!