Todd Mitchell's 20 Rules For Trading Success

1. Always use stops. Risk control is the true measure of a good consistent trader. If you lose all your capital on the lemons, you can’t play when the great trades set up. Consider cash as having an option value.
2. Don’t over trade. This is the number one reason why individual traders and investors lose money. Look at your trades of the past year and apply the 90/10 rule. Dump the least profitable 90% and watch your performance skyrocket. Then aim for that 10%. Over trading is a great early retirement plan for your broker, not you.
3. Don’t forget to sell. Date, don’t marry your positions. Remember, pigs get slaughtered. Always leave the last 10%-15% of a move for the next guy.
4. Don’t chase the market. If you do, it will turn back and bite you. Wait for it to come to you. If your miss the train, there will be another one along in hours, days, weeks, or months. Patience is truly a virtue in this business.
5. When I put on a position, I calculate how much I am willing to lose to keep it. I then put a stop just below there. If I get triggered, I just walk away. Only enter a trade when the risk/ reward is in your favor. You can start at 2:1. That means only risk a dollar to potentially make two.
6. Always be willing to go Long (Buy) and Short (Sell). You have to be flexible and dynamic in your trading…one minute I could be long the market and the very next minute I may be short the market. You need to be able to flip flop and be quick and nimble in your trading.
7. You don’t have to be a genius to play this came. If that was required, Wall Street would have run out of players a long time ago. If you employ risk control and stops, then you can be wrong 40% of the time, and still make a living. That’s little better than a coin toss. If you’re wrong only 30% of the time, you can make millions. If you’re wrong only 20% of the time, you are heading a trading desk at Goldman Sachs. If you’re wrong a mere 10% of the time, you’re running a $20 billion hedge fund that the public only hears about when you pay/invest $100 million. And if someone tells you they’re never wrong, as is often claimed on the Internet, run a mile, because it’s simply impossible!
8. Trading is hard work. Trading attracts a lot of wide eyed, naïve, but lazy people because it appears so easy from the outside. You buy a stock (futures contract, forex, option, etf, etc.), watch it go up, and make money. How hard is that? The reality is that successful trading and or investing requires twice as much work as a normal job. The more research you put into a trade, the more comfortable you will become, and the more profitable it will be.
9. Don’t confuse a bull market with brilliance. When the market goes straight up (i.e. 1995 to 2000) anybody and their grandmother can make money.
10. John Maynard Keynes, the great economist and early hedge fund trader of the thirties, once said: “Markets can remain illogical longer than you can remain solvent.” Hang around long enough, and you will see this proven time and time again.
11. Don’t believe the media. Look for the hard data, the numbers, and you’ll see that often the talking heads, the paid industry apologists, and politicians don’t know what they’re talking about.
12. Sometimes the conventional wisdom is right.
13. INVEST like a fundamentalist, execute like a technical analyst. (Swing) TRADE using technical analysis…then by understanding basic fundamentals will make you even better.
14. Technical analysis…knowing how to read charts like a daily newspaper is key to successful trading. That said, learn what an “outside vertical bar” is, and who the hell is Leonardo Fibonacci.
15. The simpler a market approach, the better it works (the ‘KISS’ method). Everyone talks about “buy low and sell high”, but few actually do it. All black boxes eventually blow up, if they were ever there in the first place.
16. Markets are made up of people. Understand and anticipate how traders think, and you will make a lot of money. The market is made up of peoples fear and greed…it’s all psychological…learn how to read people and you’ll certainly be ahead of everybody else.
17. Understand what information is in the market and what isn’t and you will make more money.
18. Do the hard trade, the one that everyone tells you that you are “Crazy” to do. If you add a position and then throw up or feel sick afterwards, then you know you’ve done the right thing.
19. If you are trying to get out of a hole, the first thing to do is quit digging and throw away the shovel – exit your trade asap. A blank/neutral/flat position can be invigorating.
20. Making money in the market is an unnatural act. We humans are predators and hunters evolved to track game on the horizon of an African savanna. Modern humans are maybe 5 million years old, but civilization has been around for only 10,000 years. Our brains have not had time to make the adjustment. In the market, this means that if a stock has gone up, you believe it will continue. This is why market tops and bottoms see volume spikes. To make money, you have to go against these innate instincts. Some people are born with this ability, while others can only learn it through decades of training

10 Common Elements of Trading Success

All traders can make money in the markets, there’s no doubt about that – even with different trading concepts, different systems and methodologies, and some taking the opposite sides of the same trades…BUT only when they all use trading methods and systems with 10 Common Characteristics. In other words, whichever trading method(s) you ultimately use in your trading, they must possess ALL of the 10 characteristics outlined below:

1. Your trading methodology must have a tested, positive expectancy that has proved to make money for the markets for which it was designed to trade.
2. Your trading methodology must fit you and your beliefs. You must understand that you will only make money with your method(s) because your trading methods fit you.
3. You must totally understand the trading principles you are trading and how those trading concepts generate relatively low-risk trades.
4. You must completely understand that when you get into a trade, you must have exact rules as to when to exit the trade.
5. You must evaluate the ratio of reward-to-risk in each trade that you take. For more mechanical traders, this is part of their trading system. For discretionary traders, this is part of their evaluation before they take the trade.
   

Here are five more qualities that are just as important, and in some cases more important than the ones just listed.

1. You must have a Business Plan to help guide your trading. Many companies have a plan to raise money; similarly, you need a business plan to help you treat your trading like a business.
2. You must use a Position Sizing method. You must have clear (profit) objectives written out, something that most traders/investors do NOT have. You must understand that position sizing strategies are the key to meeting those objectives… and you must have worked out a position sizing method to meet those objectives.
3. You must understand that your overall trading performance is a direct function of your personal psychology, and you must spend a lot of time working on yourself. You must learn to become efficient, rather than inefficient, decision maker when it comes to your trading…or you will not make it as a trader.
4. You must take total responsibility for the results you get. You can NOT blame someone else or something else. You can’t justify your results. Also, you shouldn’t feel guilty or ashamed about your trading results either. You ultimately have to understand that YOU created your own results and that you can create better trading results by eliminating your mistakes.
5. You must understand that by not following your trading methodology and business plan rules is a huge mistake. The average trading mistake can quite easily equate into costing you a lot of money. So, even if you make only one trading mistake a month, you can turn a profitable trading methodology into a losing one for the month…because of that one simple mistakes.

Getting Rich Slow

Forex Trading is definitely not a 'Rich Quick Scheme'. Howeve, forex trading offer an opportunity for you to get rich slow. There are few stage or learning curve to become successful forex trader. Stage one: Learning The Basics, Stage Two: Planning and Preparing for the battle in market, Stage Three : Developing 'Know Yourself' trading method & testing plus tweaking, Stage Four: KnowUrSelf & nailing down ur psychology & Stage5: Getting Rich

The Essential Forex Tips

Personally, i totally agree with this post by NickB in Fx4Noobs, he is true trade. Even though  my trading method is 'different' from him. I need to 'master' all that tips especially because:-

1. Learn the basic training before enter into warzone. Practice the 'core' skills before enter into warzone. Skills is about practice to do the same thing everyday. The first skills you need to master before enter warzone is 'how to survive' for next battle. 

2. Trading won't get you rich quick, but the 'process' of trading may makes you rich. The 'good tennis racket' won't guaranteed you will be a good tennis player like pete sampras. The skills that you master on 'basic training' and process may help you to become a good tennis player like pete sampras. The process of trading to improve skills and learn to survive will makes you make a consistent results in trading.

3. Don't listen to proclaimed expert 'traders' - they 'no' proven they are expert if they don't show you their trading records. Even if the show you their trading records, 'to master' the skills. you need to do your own praktis.

4. The best 'Do You Own Analysis'. Blindly follow other people tips, will make you BLIND. If you want to become successful trader, you need to 'master' you own skills in your trading method and analyze the 'trade' that you want to enter.You won't be able to make money 'consistently' if you follow other people tips once they stop give tips. Learn to trade, improve core skills and trading method.

5.Kill Losing Streak Early. Lets follow scrat idea... On each trade, assess the 'level' you willing to lose.

6. Stick with single method. If you choose to trade 'single' method, then you can trade 'any time frame' and 'any pairs'. But if you 'prefer' to trade more than 'one' method, then you should focus on 'single' currency and 'single' time frames.

7. Keep It Smart & Simple. Its easier to follow simple instruction compared to 'complex' or 'confused' instruction. Its easier to discipline to follow simple method compared to complex methodology. Choose simple instruction to know the SETUP. Choose simple rule to pull the trigger. Choose simple rule to exit the trade for stop and profits.   

8. Clear Chart. When i start to trade, i believe indicators is the 'holy grail' for trading. If MACD can tell me the trend & RSI can tell me the Oversold or Overbought. If the trend is UP & the price is OVER; its the best time to sell because the trend is going to reversed. At the end, i still losing my money. However, because i believe with concept that OVER in Uptrend means TIME TO SELL. So i change the 'parameter' of RSI, then i change to CCI and etc. Later i found out that maybe 'MACD' is not good indicator to determine the trend, so why not i change to Moving Average Crossover or Moving Average Slope & combined with OVER indicators. The process of learning start again by testing with RSI, CCI, Stochastic & then change the parameters etc.  During that time what i believe is like many people believe, indicators help with your trading (apparently) so the more the better, right? Obviously its Wrong! As traders gain more experience they start figuring out that less is more. The more indicators you have on your chart the more confusion you will have. Every extra indicator:. i) Adds to the clutter making your charts harder to read. ii) Gives you more to think about therefore clouding your judgment. iii) Increases the possibility of giving you conflicting signals. iv) Looks pretty damn ugly…Indicators are not essential. Now i just trade with no indicators. I call this blog as nakedtrading so that i can practice to trade without indicators. I am not saying you need to remove all indicators but limit it to a max of 2 at a time on your chart. Now i just trade by using 'naked eyes' to determine support and resistance lines or zone. This can be done by using any type of chart. Later, once the price do pullback, i will see candlestick patterns for fine tuned the entry.