List of personal rules for trading that makes U successful

Discussion in 'Psychology' started by novice, Aug 27, 2009.

  1. Why not do both? Personally, I do both then its good to compare whether you can beat buy and hold.
    This is the article which shows the longer you invest the higher probability of positive expectancy, In fact you can just randomly pick a sample of stocks and see how it does 4-5 years ago and now and more often than not you will be in the green.

    https://www.nutmeg.com/nutmegonomic...-returns-the-facts-about-long-term-investing/

    The reason I feel that trading is riskier in a sense is that odds are not exact. In trading, you want to strive to be a casino, but then in casino games the odds are exact. In double zero roulette the house edge is 5.26% and this is an undeniable fact because there are 38 numbers and two are green numbers. In trading, you can backtest a result showing the edge is so and so but then again it is curve-fitted to give you the best results, the best you can do is to estimate the odds and then bet accordingly but you never know the exact edge so there is always an element of uncertainty.

    The advice I would not give a beginner is to "always use a stop loss". If you do so, statistics show that you would join in the losing trader's club 90% of the time. A beginner more often than not is not going to understand the game straight off. Obviously, everyone starting out will have overinflated ego and be overzealous thinking they are somehow the top 1% only to find out they are not.

    A better advice would be pick maybe 2-3 top stocks/cryptos and DCA monthly maybe add in 1-2 another smaller cap stocks/cryptos that are unpolished gems (smaller caps, but good use cases, fundaments, team etc). Trade a smaller amount until you get more competent in it.
     
    #151     Dec 30, 2021
    themickey likes this.
  2. deaddog

    deaddog

    What statistics? I don't argue that 90% of traders fail. I argue that they probably fail because they didn't control their risk.

    The majority of successful traders will say that you have to have a method to control your risk.
     
    #152     Dec 30, 2021
    comagnum likes this.
  3. True. But there is always an element of uncertainty in trading like I've explained. At times buy and hold will fare better in a very strongly trending crypto/stock. Case in point, anyone who held bitcoin at the start to now is super wealthy. Like you heard of that guy in the news, oh I had btc in my hard drive and forgot all about it and now it's worth 250mil or smth. I have never heard of someone saying he traded btc since inception and made 250mil from it. So there you go.
     
    #153     Dec 30, 2021
  4. deaddog

    deaddog

    LOL; There I go.

    The question is how will they fare when the trend is down?
     
    #154     Dec 31, 2021
  5. I would say still pretty good if you are Satoshi Nakamoto.
     
    #155     Dec 31, 2021
  6. Here are some that I try to abide by -
    1) Manage risk - use stop and take profit order and assign proper risk and reward ratio.

    2) Control emotions because if you fail to do so, then you will lose.

    3) Backtest all your trading strategies, it doesn’t matter if you win or lose.

    4) Do not risk all that you have in your pockets.

    5) Do not take wins and losses to the heart.

    6) Learn something new everyday and you will do better than your previous day.
     
    #156     Jan 13, 2022
  7. Patience
     
    #157     Jan 19, 2022
    easymon1 likes this.
  8. Normalcy

    Normalcy

    My biggest personal trading rule is to not break my rules. We all are very efficient at making rules but there’s only a few traders who actually follow them. You don’t need to make rules for everything, just keep your trading plan simple by adding only those things that you can comfortably do. It helps you to be consistent and you’ll be able to stick to your discipline.
     
    #158     Jan 28, 2022
  9. Tritical

    Tritical

    Some of the rules that have helped me to become a better trader
    1) Use of stop loss and take profit order.
    2) Risking 2% of my trading capital
    3) Maintaining a trading journal
    4)Backtesting regularly
     
    #159     Jan 28, 2022
  10. Some of the rules that have helped me win trades.
    1) Having a trading plan
    2) Not risking more than 2% of trading capital per trade.
    3) Being consistent and sticking to my strategy.
    4) Using stop losses, take profit order, and other risk management strategies.
    5) Learning from previous trades
     
    #160     Feb 3, 2022