Please Share Your #1 Trading Rule You Adhere to with Discipline

[eqsys 10]

Trade with a system

Trade your best system

Actually trade the system - it's smarter than you

Absolutely know the worst loss that might happen with the system and be prepared by the following: DON'T OVERLEVERAGE

[MightyMouse 12]

Trade with a system

Trade your best system

Actually trade the system - it's smarter than you

Absolutely know the worst loss that might happen with the system and be prepared by the following: DON'T OVERLEVERAGE

 

Do you really think your system is smarter than you?

 

If you coded it, it would be 5, 10. 50, or etc. lines of code. You are a lot smarter than x lines of code aren't you?

[eqsys 10]

My systems are MUCH smarter than I am. They include the best ideas I have ever come up with. They don't forget. They don't make stupid mistakes.

 

Through trial and error I have eliminated thousands of ideas that either don't work or don't work well, and included ideas that do work, and some work quite well. The systems have no emotions, they don't forget the rules, they don't get greedy or scared, and that's what I mean by smarter than me.

 

They are a collection of my best ideas. They work for me day and night, waking or sleeping, at home or away. The systems can backtest, in 5 minutes, more theoretical trades than I can ever hope to test.

 

In the "good old days", when I used to test ideas by hand with graph paper (before PCs), it took days to test a year of buys and sells. Now I can do that in a few minutes.

 

I have been coming up with system ideas and testing them for decades, and I can't remember all the rules. The systems never forget.

[SunTrader 10]

Absolutely know the worst loss that might happen .........

 

No system or human can know that at all times and under all market conditions.

[tinyboy 10]

Rule #1 always define your risk before you enter the trade

 

I always follow this rule, but unfortunately, I don't stick to the initial risk I set all the time. So I guess a better rule would be STICK to your defined risk for every trade

[avir4tg 10]

#1. Always trade with stop losses. Trading without them is the #1 ruin of traders.

[SIUYA 11]

Absolutely know the worst loss that might happen with the system and be prepared by the following: DON'T OVERLEVERAGE

 

I agree with the sentiment - but you also have to add that even though you might know what the worst loss is in the past - you must also be aware that while this gives you a measure, your worst loss is yet to come using the system..... in other words that worst loss figure is there to be broken!

[MightyMouse 12]

Rule #1 always define your risk before you enter the trade

 

I always follow this rule, but unfortunately, I don't stick to the initial risk I set all the time. So I guess a better rule would be STICK to your defined risk for every trade

 

Rule number 1 is remember all your rules.

[eqsys 10]

No system or human can know that at all times and under all market conditions.

 

RE: worst loss - of course we can't know the absolute, final worst possible loss, but we can backtest and know the worst loss that has occurred during the backtest period. I allow about 10x that amount to trade one contract and this prevents me from getting wiped out or making some stupid mistake.

[marty221 10]

stops are for you to live another day.. I have forgotten them and it hues big time.

[Tams 20]

#1. Always trade with stop losses. Trading without them is the #1 ruin of traders.

 

rule #1a: Never widen your stops

[SunTrader 10]

......... I allow about 10x that amount to trade one contract and this prevents me from getting wiped out or making some stupid mistake....

Wow!! 10 times. So I guess you trade really small or have a humongous trading account balance?

 

Not that it is mine or anyone else's business what any other trader does and that applies to which rules me, you or anyone else does or does not adhere to.

 

The "market" sorts it all out.

[eqsys 10]

Wow!! 10 times. So I guess you trade really small or have a humongous trading account balance?

 

Not that it is mine or anyone else's business what any other trader does and that applies to which rules me, you or anyone else does or does not adhere to.

 

The "market" sorts it all out.

 

When the market "sorts it all out" you don't want to be the one it sorts out of your money and sanity.

 

I've been trading a long time and the balances are big enough so that I don't want to lose more than 10% of net account valuation during periods of unusual drawdown.

 

When the balances were smaller I didn't much mind losing 20-30%, but when the numbers get bigger that percentage really hurts. It's not play money.

 

I have traded almost everything and gone through some huge and horrible market swings. In the "good old days" I was, in retrospect, reckless - overleveraged and traded without stops. I was able to make some sizeable gains quickly - but I found that the balances collapsed even faster.

 

So, I have learned to be more careful. I have learned to NOT be greedy.

 

A lot of novice futures traders want to make a lot of money very fast. And, many are able to do that for a while, but after years of system testing, I have a fairly good idea of what's theoretically possible - and I do believe one can make 3-7% per month on a fairly consistent basis - not every month, but most months, using logical, trend following systems and careful money management.

 

I do want to point out that study after study shows that almost 100% of novice futures traders wipe out, as do most stock market day traders. I blame over-leverage and lack of system trading for this grim statistic.

 

So, my current rule is to allow 10x my backtested max intraday drawdown to trade 1 contract. There are plenty of mini contracts that will allow a novice to get their "feet wet" and develop a system, and yet not get wiped out.

 

At the end of every trading day I calculate my 1 week, 4 week and 52 week change in equity for all accounts. I want to know if what I am doing is really working or if I need to change strategies.

 

My goal is to make steady gains, not to get some thrill by trading. Trading can become gambling, and can become a wild ride with huge ups and downs. Every trader has to look at themselves and ask why are they trading?

 

My goal isn't to have fun or get my blood pressure soaring, it's to make consistent, steady profit, to be able to sleep at night, to have a fairly good idea of how much I will lose in a bad streak of drawdown - in other words, I don't want to become a statistic.

[pitrader 10]

The only thing that is worse than being wrong in this business is staying wrong. I would much rather be out of the market wishing I was in than in the market wishing I was out!

 

NEVER CANCEL YOUR STOPS!!!

[ake 10]

"Be there to take the trade".

 

Potential profits from missed trades exceeded losses from all other errors I made in the past month combined, by a factor of 2:1.

 

If past experience is anything to go by, I will at some point in the future "master" this rule, and it will cease to be my number one rule. Instead, I will move on to the next category of error I will be making, that will be costing me the most money, and I will come up with another "number one trading rule" to address it.

 

My "number one trading rule" is a pretty transitory thing. At this stage, I don't know of "perennial truths" in my trading. It's all about troubleshooting. One at a time.

[cornixforex 10]

Always have a hard stop-loss in place (with the exception of long option trades).

 

That's my #1 rule I always obey.

[JTurner77 10]

Lots of great stuff in here and I appreciate the contributions of everyone who shared.

[Gekko78 10]

No 1 rule:

 

Never ask why ......just react.

 

 

If you thought XYZ was going to zig and it zags DO NOT ASK WHY ......Just react.

[MadMarketScientist 11]

"Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat"

- Sun Tzu, The Art of War

 

Technical set-ups are not strategies, they are tactics.

 

Identifying a specific profile or pattern in conjunction with an indicator signal is not a strategy, it is a tactic.

 

Tactics are the maneuvers traders execute to win and lose battles. They may produce short term marginal gains but will not win the war of true consistency if they are not coordinated with a strategy.

 

Defining a strategy to execute trading tactics starts with understanding market state. Market state is the technical environment the drama of trading day is played out on.

 

MMS

[b4gt 10]

The trend is your friend. Keep your friends close but your enemies closer.