Trading Rules

If you have ever entered a Forex Forum, I am sure that you have read the importance of trading rules. Are trading rules important to your success? Yes and No. Let me explain. First off, I have uncovered “one of many” Trading Rules sheets that I have made.
Lets go through one of my sheets.

Check Economic News Release- Correlation Index- Make a trade plan for Each Trade- Make a Daily Trade Agenda-Daily Profit => Total exposure=SL – Identify Hi/Lo – Draw Price channels – Trade the Plan -Pending Longs, until Trendline Break – Martingale pending Long – Hedge GU Long/ GJ Short -Trendline Break? Check M15, H1, H4 – Scaling shorts on Pullback – Don’t Trade Pair with 2 Open markets- Watch market 20mins before News Release- Psychological 50′s – Add TS once SL =0 – Enter on Swing Points — Use pending for Entry. Scalping use 4x Lots. Swing use 1x Lots. Adjust Stoploss determined by volatility and swing size. Never use Fixed stoploss until it is for Break out. Wait for patterns, TL Break, Momentum. Position Build on Pullback. Increase lots on each Pullback. Tighten Stoploss when new swing point is determined. Each trade will have a different Stoploss and Take profit goal. Determine this goal before entering the market. Determine where would be the best entry point. Do not limit your self to 1 entry order. Break up the entry order into smaller lots that add up to your specific risk level. We do not want to miss out on the whole move before our pending order was not hit. A small lot entry is better than No lot entry. Never get greedy. allows take profit at your specific level or once the pattern has changed. Be patient and wait for the setup. Never, sit down and jump into a trade. Analyze all the data before deciding where would be a great entry. Patience will also lead to missed trades, as you may not feel that pulling the trigger now, is a good time.. Do not make the decision before your analysis. If your analysis is telling you to enter, then enter. Your strategy is your edge and probability will make your equity grow. Have confidence in your strategy. Do not second guess yourself. If the Pattern is present, Pull the trigger without hesitation. Have discipline, follow the rules. make money, use iDRAW with trendlines and small lots, multiple levels of entry. Close out and Reverse at Demand Level. Ride the waves. Focus, line methodology, determine current direction. enter with Tick charts, enjoy scalping and timing is everything. Time to trade is very crucial. Find the momentum for that specific timeframe. Trade all pairs, never limit yourself. 1 pip at a time == Lock in Breakeven +1. Use your Brokers money to make more money, Do not risk your own capital investment. Max Stoploss @ 100% original Equity. There is always another day.

1. Technical Analysis 2. Fundamental Analysis 3. Risk management

Market Behavior: Equities: Market up/Currency Down – Find Volatility = Action – News= Flat, spike, reversal – Avoid 2 closed markets

Commodity Correlation: Cad Up/Oil Up, Jpy down/Oil Up = CAD/JPY, AUD Up/Gold Up = Gold Leads AUD == AUDUSD/GOLD
Scalping: Use Long/short pending outside Range with SL= +5 outside of Range. Pullback = Fib Retrace, S/R level, Psychological 50′s.
Cycles: Economical Conditions normally stay weak/strong for years at a time. The years add up into normal Business Cycles.

4 Stages: Expansion, Prosperity, contraction, recession = GDP = Measures Economical Health of country.

Events
• Government Intervention
• Central Bank Intervention
• Interest Rates
• Economic Recovery
• Demand for weaker Currency imports
• Speculation- Hedge Funds- Banks
• Commodity Prices
• Inflation
• Agriculture/drought
• Natural Disasters
• War
• Economic Performance
• Increased Tourism/migration
• Banking Crisis

After reading over my old rules, some do apply to my strategy today, however, most of these rules has evolved into something much more simplistic. Rules are essential for success, but complexity is not necessary. With each strategy, your rules will change. With each strategy, more rules will be exercised. With more strategies, you may overload yourself and your trading decisions may become fragile.

As you can see, there are so many rules and guidelines, remembering all of this information will only be possible from experience. In order for you to succeed, you will have to remember and process all of this information everyday you trade. I do encourage all my students to look at their rules before and AFTER each trading day. Print out your Rules. Make a check box next to your rules and after you end your trading day, please go over your rules and make a check next to the rules that you have followed and use a highlighter for the rules you did not follow. Start logging these Trading Rule Sheets in a binder and everyday before trading, flip through your binder and see what rules are highlighted over and over again. This process will help you understand what rules you need to work on and what rules you have mentally mastered. Trading is 99% mental and 1% technical.

The sooner you make a list of rules, the sooner you will be able to exercise these rules on a daily basis. Becoming a better trader is from improving your discipline based on your own trading experiences.