10 Commandments of Trading Discipline
These Commandments of Trading Discipline should dramatically improve your trading success if adopted and followed. They were developed from years of experience from trading.
1) Trade free from fundamental prejudices. Hold no judgment on a stock. Don't try to rationalize a losing position, or fall in love with a winning one. A stock may have its "Fundamental Truths," but the "Absolute Truth" is its price.
2) Focus on proper trading strategies, and not on making money. Money is merely a consequence of skill level, or lack thereof. As long as you trade with unwavering discipline and don't review prior trades with a berating "should have" mode of thinking. Both winning and losing trades should be reviewed during your journey towards trading mastery.
3) Develop a trading style that is consistent with your personality and philosophy. Trade your personality!
4) Determine the reward-risk ratio of each trade before entering. Risking the farm to make peanuts is unwise. Create the plan BEFORE the trade, not DURING!
5) At times the best action is no action. Don't search for action and think that you must trade every day.
6) Trade with the trend since stock prices flow in the direction of least resistance. If a stock goes against the trend you expected, get out. When in doubt, stay out or get out.
7) There is no room for emotions in trading. Disciplined traders can observe the market from the perspective as if they are not in a position, even when they are. Do what the market is telling you, not what you think it should do.
8) Make the market come to you. If it doesn't play "your hand, in your world," step aside. Be strict, be disciplined, and be patient, and never trade when physically or mentally unfit.
9) The true battle is not with the market, but learning how to control your own emotional impulses, psychological demons, and human nature. Many internal battles of letting fear and greed interfere with logic and discipline can unfortunately result in painful losses. Keep your losses small using appropriately placed stops based on technical analysis.
10) There are no "holy grail's," magic software, or short cuts to success. Professional traders never cease being students of the markets. Spend time daily developing yourself to be a better person and trader, and take responsibility for your own trades and actions.
I hope these "commandments" that I and many traders follow "religiously" will help you on your journey to becoming a profitable trader and investor.
2 trades for me today with +1.5R total
1st Trade QCOM +2R
148.39/149.97 exit 143.25
12% gap down under pivot support and 50ma after a strong daily double top rejection,. I took it on a congestion breakdown with a fairly wide stop, leaving my 2R target 50c over its ATR, slow but consistent move down with great RW, hit my target on the penny before it bounced.
2nd Trade AQB -0.5R
9.40/9.70 exit 9.56
I rarely trade stocks under $10 and even more rarely short them. I liked this daily chart as it broke its uptrend channel and stayed under a strong 9.50 support line enough room to its daily 50ma. I entered after a pullback with a fairly wide stop but only 1/3 of its ATR used at the time. It failed to break down with the strong market open and stayed in a narrow range.
I actually broke my plan with this trade as I lowered my stop to a pivot where price made a big bounce earlier at 11am with a large seller sitting there. My thought was that if it breaks that level again then it will likely...
1 trade for (-1R)
I took a BD on QCOM. I was worried about the target being close to the daily range, so I took a tighter stop on the 2 min chart. I am looking through PTS right now, most of the examples have 2 options for where to put your stop. It looks to me like one of the stops would be at the bottom of the main consolidation area, and the other at the bottom of where there has been a shakeout or turnaround bar (if there has been one). Due to the daily range I took the tighter one on this. In hindsight it seems obvious to take the wider stop, but in the moment it looked ok.
I was then looking at the 15 min 3BP on QCOM, but the reason I used a tighter stop in the first place was because of the range. The 15 min 3BP would have needed to have gone even further than the wider stop on the 2 min BD, so I didn't take it.
