Four Principles a Trader Needs to Follow
You will find that the same qualities and attributes which serve us in life, also serve us in trading.¬†
1) Always be truthful. In reviewing why you missed a trade, or why you took a trade that didn’t fit the criteria spelled out in your trading plan, you need to identify what emotions motivated your actions or non-actions. You have to be truthful¬†to yourself in identifying mistakes and in correcting them. Admitting mistakes is the first step to correcting them, and this process¬†starts with the truth. Admit that you are human and that your will make mistakes and those mistakes are your responsibility.
2) Never take anything personally. Trading is a business. And markets know no emotions. You need to practice detachment from your own emotions, thoughts, and opinions, and you need to always take responsibility for your actions. Know that brokers and vendors are not buddying up to you because they appreciate your qualities and¬†enjoy your company. They want¬†your business.¬†¬†Judge¬†products and services in the trading industry based on how straightforward the¬†seller is,¬†track-record, and how transparent and accessible the ownership is.¬†¬†Trading is your business and you need to keep it that way.
3) Never assume.¬† No matter how confident you are of a price move, never think you can skip steps, or not check price for indecision or momentum on the approach to influential support or resistance. And always define and collate a market’s direction on¬†the appropriate time frames before committing to a trade.¬†
4) Always give your best effort.¬† Get to your desk early¬†so you have extra time to prepare. Do not skip steps in your trading preparation process.¬†Work on staying focused yet still physically relaxed. If you¬†decide to incorporate new wrinkles and additions to your method, back-test them extensively before trading them live.¬†Be mindful of eating right and staying healthy so that when market moves start accelerating you can¬†stay on top of them by making adjustments to your sleep schedule when necessary. Trading is work,¬†not a hobby. You need to give it the same serious consideration as anything else where the goal is to make money.¬†¬†
If you recognize these four attributes it may because they are¬†from of Don Ruiz’¬†¬†book¬†“The Four Agreements”,¬† which¬†serve¬†us well as a frame-work to¬†model more than just our¬†trading behavior on.
I’m looking forward to¬†an even more fulfilling¬†New Year where we continue to demonstrate to you the step by step process of trading achievement.
Trading is a risky endeavor and not suitable for all investors.
To see Jay Norris point out trade set-ups and signals in live markets during U.S. evening hours go to Live Market Analysis . Jay is Chief Market Strategist at IBTRADE, and the author of Mastering the Currency Market, McGraw-Hill, 2009 and Mastering Trade Selection and Management, McGraw-Hill, 2011.