10 Essential Trading Rules of Professional Traders

10 Essential Trading Rules of Professional Traders
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Have you ever wondered how professional traders see the market differently?

How do they continue to make exceptional returns day after day, while 90% of retail traders lose money on a daily basis?

Here are my top 10 trading rules I developed, after over 10,000 hours of trading professionally, and I hope that this will help you take your trading to the next level.

Infographic 10 essential rule of professional trader

1. Always be disciplined

  • Follow your plan and rules
  • Do not be swayed by your emtions to act otherwise
  • Do not create excuses to break the rules – this time is NOT different

2. Plan the trade, trade the plan

  • Always cut your losses according to plan
  • Always cut your profits run according to plan
  • Separate your planning from your execution

3. Expect losses

  • Losses are part of trading – accept them. This will reduce emotional resistance when the time comes to do so.
  • Do not take a trade unless you are willing to accept the risk (possibility of loss) that accompanies the trade
  • Accept that you willlose money on some trades
  • Take your losses easily when they come
  • Do not be stubborn and bend your rules

4. Manage your emotions

  • When i doubt or unsure, get out!
  • Always analyze objectively
  • Clear all positions to have a neutral frame of mind
  • Do not act based on greed or fear

5. Focus on trading well

  • The goal of a trader is to make the best trades
  • Money will naturally follow
  • If you focus on money, emotions will get in the way and you will not be able to make the best trades

6. Do not overtrade

  • Be patient. Do not rush into a trade.
  • Do not trade when there are no good setups
  • Do not try to be in the market all the time
  • It is better to miss a boat, than to leave on one full of holes
  • One good trades is better than three bad trades
  • “There is a time to go long, a time to go short,and a time to go fishing.” – Jesse Livermore

7. Trade what you see, not what you think

  • Don’t concern yourself with why things are happening
  • Observe what is happening, and act on it
  • Ignore the noise – tips, rumours, news, speculations, etc
  • Anticipate the future, but trade in the present
  • Markets are never wrong, opinions are

8. The trend is your friend

  • Don’t enter just because it looks “overbought” or “oversold”
  • Don’t try to catch a falling knife
  • The easiest money is made trading with the trend
  • Make sure you have an edge before you enter the market
  • Put as many factors in your favour as possible

9. Do not repeat your mistakes

  • Keep good records of your trades and thought process
  • Analyze your mistakes, then move on
  • Do not make the same mistake again
  • Continuously improve yourself

10. Have realistic expectations

  • Do not try to make stellar returns overnight
  • Aim for small consistent returns over a period of time
  • Do not expect to become an expert overnight
  • Trading takes time to build experience

 

thumbnail beginner guide to trading and TA

If you would like to learn how to get started in trading, also check out: “The Beginner’s Guide to Trading & Technical Analysis”

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