- Rules
- Attitudes
- Techniques
- System
1. Rules - the basic rule that must not be broken
¨ Use a stop of any kind
- Place a stop loss when you put on an order
- This is the only control you have in the market
¨ Hold on to the winner and cut the loss when it is small
- We tend to optimistic when holding loss trade and we tend to pessimistic when you are holding a winning trade. This is all about the tendency of getting pleasure and avoiding plain.
- We need to give time to market for the profit to grow
- The theory underlying is that if you get a so so system or even a system about 50% wining ratio, if the loss always > profit per trade, you are dim to loss.
¨ Never plunge
- Do not make order without planning in advance
- Usually you are get the feeling that This got to be the trade, and you have this feeling, you are usually wrong.
¨ Consistent and Focus
- Market specific: Trade only one market at a time, e.g. sugar only and trade it good and be focus
- Techniques specific: Use same technique for any market, usually only trend following system will work
Always remember the basic rules; they will keep you se survive of the game
2. Attitudes
- In this game, all you need to keep survival at all cost, keep the loss in control with a stop and hold the winning trade
- You should scare of the market and losing money so you will be alert to danger. Don't think the capital you have is a risk capital that you can afford to loss without problem, then you dim to lose it.
- You should be able to score when you are behind the game, when you are losing you are just behind the game and should keep going on and catching up, you are just behind and dead
3. Techniques
- Only use proven techniques that work, how? Test the system without optimize it.
- Technical analysis do not work
- Techniques that can add odd to your side
- They can be seasonal factor – day/week/month , inter-market relationship, special situation – holidays/option expire/
4. System
- You don't need to follow the system – no rule but not the basic
- When you don't feel right about the system you can break the rule since trading cannot be full mechnical
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