Ten commandments of trading to become a successful system trader
These Ten Commandments of Trading are more than mere principles; they are the foundation upon which you can build your trading career.
Introduction:
Trading, the art of navigating financial markets, is a journey filled with challenges and triumphs. In this ever-fluctuating world of finance, where fortunes ebb and flow like the tides, wisdom and discipline are your guiding stars. To illuminate your path, we present the Ten Commandments of Trading - rules that aren't just suggestions but the very essence of a successful trading career.
1. Accept Short-Term Losses:
Quote: "In trading and investing, losses are the tuition you pay for success." - Howard Lindzon
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To achieve long-term success, embrace short-term losses as learning opportunities. Trading isn't a sprint; it's a marathon where setbacks are the price of admission.
2. Embrace Drawdowns:
Quote: "Drawdowns are the trade-off for returns." - Michael Marcus
Rather than resisting drawdowns, welcome them as companions. They are an integral part of trading, not foes to be defeated.
3. Respect the Randomness:
Quote: "The market can remain irrational longer than you can remain solvent." - John Maynard Keynes
Acknowledge that market outcomes are inherently random. Don't skip trades based on past results; each trade is independent.
4. Trust Your System:
Quote: "Your trading system should be your ally, not your ego." - Van K. Tharp
Have faith in your trading system and avoid interfering with it. In the long run, trading systems tend to triumph if left to do their job.
5. Beware Unrealistic Expectations:
Quote: "The stock market is filled with individuals who know the price of everything, but the value of nothing." - Philip Fisher
Stay grounded and don't be swayed by tales of uninterrupted success on social media. Your journey is unique, and setbacks are your teachers.
6. Learn from Setbacks:
Quote: "It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong." - George Soros
Failure is a stepping stone to success in life and trading alike. Embrace drawdowns as opportunities for growth and achieving new equity highs.
7. Question Your System:
Quote: "There is no holy grail in trading. The only holy grail is inside you." - Jesse Livermore
Before implementing a trading system, rigorously question its validity. Systems with minimal drawdowns may be built on luck or overfitting.
8. Start Small, Scale Gradually:
Quote: "Risk comes from not knowing what you're doing." - Warren Buffett
Begin with a modest stake when trading a new system. Gradually increase your position size as you become accustomed to its fluctuations.
9. Assess Risk vs. Return:
Quote: "In trading and investing, it's not about how much you make but rather how much you don't lose." - Bernard Baruch
Don't be enticed solely by high returns. Evaluate the risk-to-return ratio and adjust your approach to align with your risk tolerance.
10. Prepare for the Worst:
Quote: "The goal of a successful trader is to make the best trades. Money is secondary." - Alexander Elder
Always assume your biggest drawdown lies ahead. Mitigate risk by trading conservatively. In the trading world, survival is the key to long-term success.
Conclusion:
Trading success transcends technical know-how; it demands a mindset steeped in resilience, discipline, and adaptability. These Ten Commandments of Trading are more than mere principles; they are the foundation upon which you can build your trading career. Embrace losses, accept drawdowns, and remain vigilant. In the tumultuous seas of financial markets, let these rules be your guiding stars, leading you toward a future filled with confidence and purpose.