Consistent trading and investing success requires following rules
Rules, rules, rules! In this article we elaborate on the fact that rules are necessary to become successful in the trading arena.
Consistent trading and investing success requires following rules
Positioning yourself to become a consistently successful trader in the forex, futures, and stock market is a methodological and orderly trading process, which necessitates formulating strict rules and committing to them. To be very honest, this is a difficult hurdle to cross. Why is this? You might ask. Well, it implies that you must develop self-discipline. Similarly, it also means that you must be accountable for all of your results.
A definition of rules says it is a procedure or governing action. Considering "governing action," you will discover that it encompasses the way that rule-oriented trading and investing relates to results-oriented trading and investing. And this is because of the importance of rules to trading processes. Technically, trading forex, futures, or stocks without rules or flaunting your rules means you are intentionally putting your money to risk based on nothing but hope. It is safe to say trading rules govern because they represent the procedures and parameters of your emotions, thoughts, behaviors, setups, strategies, stops, entries, exits, trade management, and money management. Hence, the difference between being successful and blowing your account is your properly schemed rules.
Another thing worthy of consideration is that humans live according to the stories they had conjured when they were much younger – usually like a script to a play. These scripts (stories) can be regarded as rules, too. They constitute our behavior's foundation. Factually, as we grow, we start developing some typical response patterns to repetitive events. We can also call these typical patterns of behaviors or responses to a set of rules that we live by. For instance, if you owe someone, you're expected to balance your debt. Driving, for example, consists of certain rules that ensure safety and the orderly transition of traffic. This list of rules reflects in all our decisions. These scripts, life stories, or rules also involve lessons that we learned when we were much younger. These lessons have created the lenses through which we see and judge the world. This includes rules about privilege, money, worthiness, power, losing, and winning. This analysis explains that rules aren’t only essential to trading; instead, having rules is solely in your best interest.
Majorly, belief-connected rules are out of our awareness. We make crucial choices depending on these life rules. When we achieve undesirable results, it is often challenging to change such results if we do not change the rules that influenced those results. That is, if you do not challenge your choices, then knowing why you made such choices remains out of your consciousness. However, you can challenge and modify these rules once you can identify them. Besides, challenging these rules results in discovering other assumptions that depend on that rule to be myth instead of the truth.
Interestingly, if you believe mythology is real, it ceases from being mythology; instead, it is the truth to you, whether it serves you or not. For instance, stock trader Andrew believes in exploiting the advantages of all life opportunities. Over time, this belief becomes the truth in his mind and may not even be an issue. However, if you‘re always looking to impulsively enter the market when there a random supply and demand zone, then there's a unique susceptibility of you experiencing the demerits of overtrading. Factually, this simple yet powerful "myth" may make you lose in trading, even though it can be functional in other aspects of your life.
You must ensure that your rules support your A-Game, your best and highest trading state of mind while in the market. Hence, that's the reason you should have a set of rules that gear towards your internal data, such as emotions, thoughts, and other behaviors that underlie your trade, and your mechanical data, such as setups, indicators, price actions, supply and demand zones, economic reports, and others. That is, you want to support your emotional stability and trading mindset to focus solely on the most critical things in the trade. Below are a few rules that we also teach in our live trading classes and skill building investing courses to support your internal data:
Flexibility, whether figuratively or literally, is the key! Learn to change when necessary. Doing the same thing translates to the same result. This is the reason why you must embrace the idea of flexibility – change!
Know when it's necessary to exit
Do you discover you are violating a rule? Do not hesitate to exit such a trade, whether you are making a profit or not! Staying there simply means you're reinforcing your bad habits, especially when you're making a profit.
Do not buy into the idea of "hope"
Hoping simply means you are putting your money up for pure chance—no strategy, defined rules, etc. Refuse to be hopeful when trading!
Know your risks
Never forget to calculate your risk to reward ratio and stick to the parameters. This way, you can have a 33% hit rate and still make profits.
Take responsibility for your performance
Set goals and document your emotions and thoughts and other trading mechanics. That is, document your internal and mechanical data. Own your mistakes, stay accountable for your decisions.
Learn how to harness your positive emotions such as inspiration, determination, joy, passion, etc. Understanding others' emotions while managing your negative thoughts. General Patton once said: "If everyone is thinking the same, then someone isn't thinking." Similarly, Buffett said: "Be fearful when others are greedy and greedy when others are fearful."
This happens to be the most crucial part of your life. Life doesn't end at investing and trading: there is more to it. Do not live to trade; instead, trade to live.
Never adjust a rule, strategy, or principle to conform to the market. Instead, let the market conform to your strategy. Create a target, set a rule, stick to the rule without deviating. Like Alex Hamilton said, "If you stand for nothing, you'll fall for anything."
Technically, what matters the most to enjoy the most desired result is your A-Game and trading from your best and highest self. You should not delve into trading unfocused or unprepared. Trading is also a mental game; not having emotional and mental tools is similar to driving a vehicle without its steering – your crash is imminent! Hence, make your rules the key to your trading vehicle that contains all your necessities, especially the steering, to drive consistent trading results.
If you want to learn more about professional trading and investing across multiple asset classes such as forex, futures, and stocks, please sign up here for free at our online trading academy www.onlinetradingcampus.com and get access to a free three-hour introductory course.
Author Bio: Bernd Skorupinski teaches the undiluted truth about trading and investing at Online Trading Campus and takes you through what it takes to be a consistently successful trader. His favorite moment as a trading mentor is the way peoples’ eyes light up with excitement and confidence when they understand how Supply and Demand trading strategy works and how it can help win in the trading arena. He believes in building core values and discipline that ensures his students do not succumb to the pressures and temptations of the market. He very much believes in following plans and strategy through. If you want to know more about the author Bernd Skorupinski please read here