49 Professional Trading Rule.

1. Trading is simple, but it is not easy.. If you want to stay in this business, leave hope at the door, focus on specific setups, and stick to your stops,

2.  When you get into a trade watch for the signs that you might be wrong.

3.  Trading should be boring. like factory work. If there is one guarantee in trading, it is that thrill seekers and impulse traders get their accounts ground into parking meter money.

4.  Amateur traders turn into professional traders once they stop looking for the "next great indicator."

5.  You are trading other traders, not stocks or futures contracts.Who is taking the other side of your trade? Is it an amateur who is chasing or a professional who has been patiently waiting for this entry all day? You have to be aware of the psychology and emotions on both sides of the trade,

6.   Be very aware of your own emotions. Irrational behavior is every trader's down fall. If you are yelling at your computer screen, imploring your stocks to move in your direction, you have to ask yourself, is this rational? Ease in. Ease out. Keep your stops. No yelling. The person who is screaming should be the one on the other side of your trade

7.  Watch yourself if you get too excited excitement increases risk because it clouds judgment. If you are feeling peak excitement, it probably means the move is just about over. Tighten your stop and look to reverse,

8.  Don't over-trade.

9.  If you come into trading with the idea of making big money, you are doomed. This mindset is responsible for most accounts being blown out.

10.  Don't focus on the money. Focus on executing trades well. If you are getting in and out of trades rationally, the money will take care of itself.

11.  If you focus on the money, you will start to try to impose your will upon the market in order to meet your financial needs. There is only one outcome to this scenario: You will hand over all your money to traders who are focused on protecting their risk and letting their winners run.

12.  The best way to minimize risk is to not trade when it is not time to trade.

13.  There is no need to trade five days a week.

14.  Refuse to damage your capital. This means sticking to your stops and sometimes staying out of the market.

15.  Stay relaxed. Place a trade and set a stop. If you get stopped out, that means you are doing your job. You are actively protecting your capital. Professional traders actively take small losses. Amateurs resort to hope and sometimes prayer to save their trade. In life, hope is a powerful and positive thing. In trading, resorting to hope is like placing acid on your skin.  The longer you leave it there, the worse the situation will get.

16.  Never let a day trade turn into an overnight trade. An overnight trade should be planned as an overnight trade before the trade is ever entered..

17.  Keep winners as long as they are moving your way. Let the market take you out at your target or with a trailing stop. Don't use impulse exits. Every exit is taken for a specific reason based on parameters that have been clearly defined.

18.  Don't overweight your trades. The more you overweight a trade* the more hope comes into play when it goes against you. Remember, hope to trading is like acid to skin.

19.  There is no logical reason to hesitate in taking a stop. Reentry is only a commission away.

20.  Professional traders take losses. Being wrong and not taking a loss damages your own belief in yourself and your abilities. If you can't trust yourself to stick to your stops, whom can you trust?

21.  Once you take a loss, you naturally forget about the trade and move on. Do your self a favor and take advantage of any opportunity to clear your head by taking a small loss.

22.  Find out what loss parameters work best for your setup  and adjust them accordingly.

23.  Get a feel for market direction by drilling down.' Look at the monthly charts, then the weekly, daily, 60-minute, 15-minute, and 5-minute to get the best idea of what the market is going to do in the short term. Always start with the larger time frames and drill down to the smaller.

24.  If you are hesitating to get into a position when you have a clear signal, that indicates that you don't trust yourself, and deep inside you feel that you may let this trade get away from you. Just get into the position and set your parameters. Traders lose money in positions every day. Keep them small. The confidence you need is not in whether or not you are right; the confidence you need is in knowing you execute your setups the same way each and every time and do not deviate from the plan. The more you stick to your parameters, the more confidence you will have as a trader.

25.  Averaging down on a position is like a sinking ship deliberately taking on more water This is ridiculous and stupid. Don't be ridiculous and stupid.

26.  Try to enter in full size right away. If you pick up a half position first, don't add to it and create a full-sized position unless the trade is going your way.

27.  Ring the register and scale out of your position.

28.  Adrenaline is a sign that your ego and your emotions have reached a point where they are clouding your  judgment. If you are not in a trade, do not enter a new trade in this state of mind. If you are in a trade, stick to your parameters and walk away. If you are in a losing trade that has gone through your stop, exit your trade immediately and walk away from the markets.

29.  You want to own the stock before it breaks out, then sell it to the momentum players after it breaks out. If you buy breakouts, realize that professional traders are handing off their positions to you in order to test the strength of the trend. They will typically buy them back below the breakout point which is typically where you will set your stop when you buy a breakout- Use this information to make money off of amateur traders who buy breakouts.

30.  Embracing your opinion leads to financial ruin. When you find yourself rationalizing or justifying a decline by saying things like, They are just shaking out weak hands here or, The market makers are just dropping the bid here then you are embracing your opinion. Don't hang onto a loser. You can always get back in.

31.  Unfortunately, discipline is not learned until you have wiped out a trading account. Until you have wiped out an account, you typically think it cannot happen to you. It is precisely that attitude that makes you hold onto losers and rationalize them all the way into the ground. If you find yourself saying things like, My stock in EXDS is still a good investment^* then it is time to rethink your trading career.

32.  Siphon off your trading profits each month and stick them into a money market account. This action helps you to focus your attitude and reminds you that this is a business and not a place to seek thrills. If you want thrills, go to Disneyland.

33.  Professional traders risk a small amount of their equity on one trade. Amateurs typically risk a large amount of equity on one trade. This type of situation creates emotions that ruin amateurs' accounts.

34.  Professional traders focus on limiting risk and protecting capital. Amateur traders focus on how much money they can make on each trade. Professionals always take money away from amateurs.

35.  In the financial markets, heroes get crushed. Averaging down on a losing position is a heroic move that is a kin to Superman taking a spoonful of Kryptonite to prove his manhood. The stock market is not about blind courage. Nobody hands out any awards to traders who picked the dead high or the dead low. Wait for a setup. This is about finesse. Don't be a hero.

36.  Traders never believe that they will blow out their account. Always realize you will become a candidate for this if you don't stick to your trading rules.

37.  The market reinforces bad habits. If early on you held onto a loser that went against you by 20 percent, and you were able to get out for break even, you are doomed. The market has reinforced a bad habit. The next time  you let a stock go against you by 20 percent, you will hang on because you have been taught  that you can get out for breakeven if you are patient and hang on long enough.

38.  Take personal responsibility for each trade.

39.  Amateur traders think about how much money they can make on each trade.  Professional traders think about how much money they can lose.

40.   At some point traders realize that no one can tell them exactly what is going to happen next in the market, and that they can never know how much they are going to make on a trade. Thus the only thing left to do is to determine how much risk they are willing to take in order to find out if they are right or not. The key to trading success is to focus on how much money is at risk, not how much you can make.

41. Losing trades don't diminish you as a person. You're also not your winning trades. They are just by-products of the business you're in.

42. Act in your best interest – placing a trade because you're afraid of missing out on a big move is NOT acting in your best interest.

43. Flawless execution comes from forming a habit. A habit is formed when it is repeated over and over again. Start practicing.

44. Don't let personal/external factors affect the trading for thou judgment is clouded. Let the market show you what to do. Always.

45. Make sure your trading goals are 1) realistic, 2) attainable, 3)measurable. If they don't meet these criteria, then the goal is nothing.

46. You want to own the stock before it breaks out, then sell it to the momentum players after it breaks out. If you buy breakouts, realize that professional traders are handing off their positions to you in order to test the strength of the trend. They will typically buy it back below the breakout point-which is typically where you will set your stop when you buy a breakout. (In case, you ever wondered why you get stopped out on a lot of "failed" breakouts).

47. Amateur traders always think, "How much money can I make on this trade!" Professional traders always think, "How much money can I lose on this trade?" The trader who controls his or her risk takes money from the trader whose head is in the clouds.

48. Siphoning out your trading profits each month and sticking them in a money market account is a good practice. This action helps to focus your attitude that this is a business and not a place to seek thrills.If you want an adventure, go live in Minnesota for a winter. If you want excitement, deliberately forget your anniversary. Just don't trade. Adrenaline is a sign that your ego and your emotions have reached a point where they are clouding your judgment. Realize this and immediately tighten your stop considerably to preserve profits or exit your position.

49. Averaging down on a position is like a sinking ship deliberately taking on more water.