Top Ten Trading Mistakes/Solutions - Part 2– Mistakes # 5 The Rules

Last week we covered the fourth topic related to trader mistakes from the top ten that come up repetitively in my conversations with traders.

Mistakes that apply to new traders will be marked will “N” where as all the rest apply to all traders at any trading level but all are important to be aware of.

Mistakes

#1(N) No Financial Preparedness

#2 (N) A Solid Trading Strategy - There is none or too many

#3 - Trading is Easy – early wins

#4 - They neglect to develop a detailed game plan to win

Mistakes will be list in priority order with the most important being the last.

As a reminder here is the Re-Cap of 1 through 4:

· Have a plan for how your money is spent in your trading day and life

· Set up rules to stick to the plan

· Minimize your losses and manage them

· Focus on one strategy till it’s mastered

· Become a “digger” and fine tune each trade

· Trading is what you make it, have fun and learn

· Be a learning sponge

· Be flexible and change with the markets

· Create a detailed game plan to win – Profits, risk rewards, targets, why you are trading, markets, size, rewards, penalties

Mistake #5 - No Rules

Rules can be a good and bad thing at the same time. Rules should be designed to keep your money safe. Protect you from going broke. Help manage the risk. Assist you in controlling bad habits and developing good ones and much more

Let’s create two categories to be clear. One is “rules” and the other “distinctions.”

My definition of a rule is any thing designed to protect your cash a distinction is anything extra that helps you trade.

Here is an example of each.

A rule: I am only willing to lose 20 ticks as a maximum on any one trade. (related to your cash)

A distinction: I will not trade during the first 10 minutes of the market.

Disciplines and rules can move your trading forward very quickly. And to do this you need to exercise the technique of repetition. Remember repetition is the Mother of skill.

By reviewing your rules and distinctions over and over the mind will begin to store them and begin to do them automatically without even thinking. You will be in “auto pilot” mode, like when you drive a car and this is a good thing.

Next be sure you are capturing all these rules and distinctions in a journal titling one page as “Rules” and the other “Distinctions.”

Create a great habit after a loss

After each and every loss creating a rule that protects your cash and finding a distinction that improves upon that trade is INVALUABLE and can really make a huge difference in the upcoming trades. It could be the ONE thing that changes your trading forever. Don’t lose the value in the loss.

Train Your Mind

To install them so auto pilot kicks in re-read your rules and distinctions each day. When they become familiar and you are acting on the them immediately move down the list.

Take the Three A-Day Quantum Leap Challenge

Each day during trading write down (3) new rules and distinctions you learned from the day. Really dig and add powerful items that will propel your trading forward. Then train the mind with repetition and you will be amazed how fast things change and how quickly you will progress.

It this work? You bet it is but it’s the best work you can do for yourself if you are serious about trading and progressing. It’s the best and really the easiest thing you can do to improve your trading.

Stay focused be diligent and exercise discipline in this activity and you will be very glad you did. When traders do this I have seen first hand how dynamic the changes become, you too can see it for yourself……but you have to do the work.

Set up a routine and be confident in your actions and results. See for yourself.

Also please feel free to e-mail of your experiences loving hearing them and what they did for you and your trading.

So here is the re-cap:

Set up two pages in your journal one for rules another for distinctions
Write (3) new ones a day
Re-read the list each morning before you trade
Write rules and distinctions after each and every trade
Train your mind through repetition
Find your quantum leap

Have fun! AND In the meantime Great Trading!

Disclaimer: Please read and remember YOU are responsible!

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