Knowing a rule, doesn’t automatically means living by that rule.
In trading it is a given dat everybody will break every rule in the book at least once.
Therefore it is better to speak of ‘never-do-it-again-rules’ and let experience be your teacher.
Here are a few never-do-it-again-rules. The list is absolutely not complete. Keep your own list during your trades. It will help you not making the same mistake twice (or thrice).
- Mens sana in corpore sano (a healthy mind in a healthy body)
This is also true for trading! Make sure you are fresh energetic when you trade. If you are tired, or not feeling well, you will make decisions you might regret.
- Don’t give up!
In the beginning trading feels like a roller coaster. Gains and losses alternate quickly. You will lose half of all of your account in minutes a few time. Don’t get discourages Keep trading. Learn from the losses. You will find logical explanations for each of them. Add them to your own list of never-do-it-again-rules. It will help you to become a steady trader.
- Never trade against the trend.
Here is where the ICMarket – Market Manager comes in handy.
- Money management 1:
Trade with a lot-size in relation to your balance. E.g. 1 lot per 1.000 in your balance. E.g. if the balance is 600, then the lot size is 0.6. If the balance is 26.400, the lot size is 26.4
- Money management 2:
Define your exit strategy. E.g. end of a trading day, leave 1/3 of the day-profit in your account to grow your trading balance. Withdraw 2/3 from ICMarkets.
- Don’t be greedy.
Sometimes you are absolutely sure that the trade is going your way and you add more lots or trades. You might be lucky, but then again, if the market revers, you end up with a margin call (where your trades are closed automatically).
Trading is 80% waiting. When you start trading a new pair, take at least 10 minutes to follow the price action. Use the market manager. Yes, you may miss out on a few early winners. But given the 20plus trades in one day, who cares?
If you are in a hurry, your first trade may end up in a big loss, because you just jumped into a reversal.
- Don’t become a bag-holder
A bag holder is someone who is in a trade going the wrong way. While hoping that fait will change, your money is in a bag and cannot be used for new trades. Cut your losses and win it back with winning trades.