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Creating Trading Rule Will Help Control the Emotions of Trading

By March 2, 2017Blog
Trading Psychology
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When we discuss the topic of trading rules there are two important topics I can think of that are quite important to most if any, all traders.  We hear it all the time.  But do we, or are we applying it?  It took me a long time to learn this process and still until today if I snap out of it one time, it can blow up a whole month of profits by not following the rules such as:

  • Do not over trade, there are tons of times for trading.  Trading will never go anywhere, but your account will if you are in a hurry to jump on every trade.  Be patient and wait for the one or two good opportunities that have a greater chance of making a move in your direction.
  • Only use Risk Capital, If you can try to treat and handle your Live trades the way you do when you are in SIM, you may see significant difference in our returns.  What I mean is we are more prone to making better trade decisions sometimes when there is no real money on the line.  An example would be of this: Cutting our profits short, and our losses larger, when we sim somehow we do the opposite.  If you are one of these traders, try to keep SIM habits and you may start generating more larger wins.
  • Do not be greedy and many more of this nature, If you are exercising margin, and most of us are, and have 2 lots on a futures contract, consider a 20-30% leverage of profit a really great profit.  In fact you should be happy with even $50 a day at that level.  Stop swinging for the fences on day one.  Slowly scale your account up.

Next we want to know what our strategy is and where it will be located:

  1. Know which markets you are trading, If you are not familiar with a market get to know the correlated market that has intermarket relationship and or ancillary markets.  Sometime you can find a great play a few seconds before anyone else because the opposite market will move before the other, Example the 30 year bonds, vs the E Mini S&P 500.
  2. Know how many markets you are trading at any one give time, this falls in line with not trying to be all over the place.  Be conservative.  If you make one good play a day and take a couple points off the market, imagine doing that with 10 to 20 lots.
  3. Know the time frame for your trading, i.e. Are you day trading or swing trading?  Make sure you do not get margin called by being stuck in the off day hours of trading. In this example I speak about the Futures and Commodities Markets in the United States.  Market hours are 8:30Am to 4:00PM EST.

Once you get this far you should be able to start applying your strategy rules and when and how to get out strategies which is a complete different subject matter, but if you follow rules and detach yourself emotionally from every single trade, you will be surprised to see significant changes in your handling of emotions and in the week end P&L’s.

 

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I wasted a lot of time and money my first year following and believing the wrong organizations on the internet.  I caught myself after spending over $15k in educators to figure this out.  Did I learn some fundamentals of the markets?  Yes, I did.  Was it worth the time and money?  No.  So, I opened Fortetrader to make an affordable shortcut for those interested in learning about the Futures and Commodities markets and do it in a narrowed down version of what is out there in the internet community.  I was not happy with companies that keep selling people the next big indicator, or the next big strategy that they do not even trade themselves or when they did, they do not even show the proof they do. I primarily did this to start building a foundation and a footprint of my own journey, as a student, a day trader, and a lifestyle seeker of time freedom and happiness balance via day trading.  It may be possible that as I progress from today into an institutional style of trading that some of my mentors I have met have directed me to do that I may implement it into a course, however as of today, that is not the plan.  Up until today I have gone from using delayed indicators, to price action, and further pursuing styles such as order flows, volume profile and market profile and theory.  Until then do not drop thousands on any kind of online school.  Take it from me it is not worth it.

Can you find a lot of things out on YouTube?  Of course, you can.  I can learn how to fix appliances in my house and save a ton of money on calling a service technician.  Some martial artists are known to have learned and executed some of their most explosive secret moves on the mats because of YouTube.  But when you try to learn something like the markets, something so robust, with so many different styles and methods and instruments, then is when you enter a maze.  A big puzzle.  And it is hard to get out of it.  You need screen time, or martial artists would call it, mat time.  Same thing.  Need to get the fundamentals then dive into the practice of the flow.

I charge $37 for an intro course that will introduce to you downloading and setting up your demo platform account with our preferred vendor, setting up charts, saving workspaces, and setting up strategies for specific markets.  You can check out the course details here.  May not be the perfect thing in the world but it is much better to deal with someone that has the time to pick up the phone and acknowledge you and your passions, and gets you to the next level in your journey, as you may discover your advanced strategies elsewhere.  I am just preparing you to not waste money on some of those guys, “can’t say their names” that charge and then upsell you to tens of thousands.  I have spoken to most of them and they are a bunch of outlying jokers.

Learn a base plan and then dig in and learn most of what you need to on your own.  Our fee helps cover our overhead on server bandwidth, maintenance, and security.  That is why I charge so little.  And while I can I will do my best to be in touch with all your questions and inquiries.  You need screen time, or martial artists would call it, mat time.  Same thing.  Need to get the fundamentals then dive into the practice of the flow.

RISK DISCLOSURE:
Futures trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one’s financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

HYPOTHETICAL PERFORMANCE DISCLAIMER:
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES LIKE THOSE SHOWN; IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK OF ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL WHICH CAN ADVERSELY AFFECT TRADING RESULTS.

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