These Commandments for discipline in trading should improve your trading
success if adopted and followed. They were developed after years of experience
from trading in the stocks and option market and from reading hundreds of books
and filtering the essence of knowledge from each, and from continuous research
and study of the markets.
1) Trade free from fundamental problems .Don’t
judge a stock. Don’t try to explain a losing position, or love a winning one. A
stock may have its “Fundamental Truths,” but the “Absolute Truth” is the
2) Focus on the proper strategies for trading, and not on making
money. Money is merely a result of skill level, or lack thereof. As long as you
trade with continuous discipline, don’t review prior trades with a “should have”
way of thinking. Both winning and losing trades should be reviewed during your
journey towards mastering trading.
3) Develop a consistent trading style
with your personality and philosophy. Trade on your nature!
the reward-risk ratio of each trade before entering. Risking the farm to make
peanuts is not the right decision. Create the plan only BEFORE the
5) Sometimes the best action is no action. Only fools think that
they must trade every day.
6) Trade along the trend since stock prices
flow in the direction of least resistance. If a stock goes against your trend
then get out. When in doubt, stay out.
7) There are no emotions in
trading. Disciplined traders can watch the market from the perspective as if
they are not in a position, even when they are. Do what the market is telling
you, not what you think it is right.
8) Make the market come to you. If
it doesn’t play “as you wish,” step aside. Be disciplined, and be patient, and
never trade when physically or mentally disturbed.
9) The true battle is
not against the market, but learning how to control your own emotional out
bursts, psychological demons, and human nature. Many internal battles of letting
fear and greed control logic and discipline which unfortunately result in
painful losses will be needed in your trading maturation process.
There are no “holy grails,” magic software to success. Professional traders
never stop being students of the markets. Spend time daily developing your
skills to be a better person and trader, and take responsibility for your own
trades and actions.