10 Trading Principles

I’d like to share some trading principles. These 10 principles are the top 10 from a list of 50 principles that was compiled from a pamphlet printed 30 years ago entitled “How Young Millionaires Trade Commodities” and these principles still apply in today’s market. Whether you trade commodities, stocks, indices or forex, these principles apply.

1. Use money you can afford to lose - don't trade with money that will give you sleepless nights.
2. Know yourself – be disciplined, know your weaknesses, control your emotions.
3. Start small – try and master the mechanics first.
4. Don’t over commit - don't use all your margin. Apply good risk management.
5. Isolate your trading from your desire for profit – try to eliminate “hope” from your trading plan.
6. Don’t form new opinions during trading hours – do not let day to day fluctuations change your overall plan.
7. Take a trading break – trading everyday may cloud your judgement.
8. Don’t follow the crowd - follow the trend, the trend is your friend.
9. Block out other opinions – do not be influenced by others once you form an opinion.
10. When you are not sure, stand aside – it is ok to be in cash and not in the market.

In trading, if you adhere to the basic principles and apply diligence, profits will come.