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10 CORE RULES OF TRADING DISCIPLINE FOR STOCKS, OPTIONS AND FOREX
1. NEVER OVER-LEVERAGE
2. Know the Economics.
Do not place a trade if you don't understand why the trade is being made.
3. NEVER EVER leave a position unattended without some sort of stop in place.
4. NEVER OVER-LEVERAGE
You will compromise your account by taking on a position that is too large to think clearly.
5. When in Doubt Get Out.
If you can't sleep at night, get out of the trade.
Trust your instincts.
6. Missed Money is Better than Lost Money.
If you have a negative gut feeling about a trade setup, stay out. There will always be opportunity to make money, but not if you don't have any.
7. Send the Trade Away, Live to Trade Another Day. If it doesn't look, or feel right, get out.
8. The First Loss is Always the Smallest Loss.
It's hard to take a loss, I know, I've taken plenty of them. I can tell you firsthand, you will save a ton of money by taking the first loss - at your predetermined stop - rather than letting your emotions keep you in a position.
Stop losses are a critical rule of money management.
9. Little Loss… Little Loss… HUGE WIN.
We must understand that there will be losses in trading.
We will accept small losses, even if there are a string of them, knowing that a big win is on the way.
We will never take a large loss by violating out stops, because doing so, would void the trading plan we are working so hard to execute.
If you think small, you will get small.
Traders who constantly take little winners off the table eventually blow up.
10. Lazy is Crazy.
At every turn, we will work hard to improve our trading knowledge by reading and studying everything we can.
Six CORE PRINCIPLES OF TECHNICAL ANALYSIS
Charting, like all technical analysis, must be understood for what it is. The core principals to understanding what technical analysis is and why it is important are:
1. Charting and technical analysis are lagging indicators, meaning that they display information about an event that has already occurred.
2. Using technical analysis alone, without regard to fundamentals, or news…is lazy, and will often cause losses.
3. Technical analysis should be used as a "beacon in the night", signaling that an event, or shift (fundamental, or news-oriented) within the market, or stock has occurred.
4. Often, technical analysis relies on 'self fulfilling prophecies', meaning that many people must be watching, believe in, and act on the same data for signals to become accurate.
5. There is no 'secret code' to markets. Some technical signals work better than others do, but none will work "all of the time."
6. Traders who utilize technical analysis (while also paying attention to fundamentals and news too), but fail to remember simple 'common sense', will eventually get killed.
A deep understanding of the above principals is vital to trading with technical analysis. One must understand technicals for what they are, while keeping a clear head as signals come about on a day-to-day basis.
In the end, common sense is king.
Forex Education and Articles
By Real Traders | For Real Traders
February | 2010 
"Virtue does not come from wealth, but. . .
wealth, and every other good thing which men have. . . comes from
virtue." -- Socrates
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Reader Response
July 1, 2009
Dear Mark,
Your book is very powerful, a real game changer... an absolute work of genius."
N e w t o n illuminated natural forces, Einstein illuminated energy and now your work/book has finally broke through and illuminated the forces and energy behind price action and volatility in the markets... (Brilliant!)
On a personal note, my office book shelves are filled with trading books on all the popular subjects... personal psychology, money management, fundamental and analysis, technical analysis, etc... and at the end of the day, they start to all pretty much sound the same... I am actually embarrassed to admit how much time and effort I have put toward trying to learn and make all that stuff work.
Then comes along your book... The first read instantly changed my whole way of thinking and my approach to markets...
And yes, the chapter on Dr. WaterMelon Stuffer...really pulled the curtain back, and your analogy made perfect sense.
Chad V
Las Vegas, Nevada