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The success of any trader depends on its discipline. Proportion of subjects in successful trading is 90%. The formula is simple: Trade with discipline - and you will succeed, or trade your undisciplined - and you lose.
For 20 years I am a trader and a member of the Chicago Board of Trade - Chicago Board of Trade (CBOT). During the successful operation of scalpers on the trading floors I had to trade in different markets: it was the 30-year treasury bonds on CBOT, S & P 500 at the Chicago Mercantile Exchange (Chicago Mercantile Exchange - CME), as well as securities on the London International Financial Futures ( London International Financial Futures Exchange - LIFFE). And now to the best of free time, I trade futures E-mini Dow at CBOT.
I received a bachelor's degree in Business Administration from the University of Denver, but the student himself sverhodarennym never considered. Formal education in the field of technical analysis I have not. I can not even build the formulas or Fibonacci Moving Averages - not to mention how all of this trade. Education in the fundamental analysis of markets, I also do not. I do not understand the causal link between the actions of the Operations Committee on the Federal Open Market (FOMC) and the price behavior of Treasury securities or other assets.
Then how I get to be successful from day to day trading in the markets for more than 20 years? The answer is simple: I trade with discipline and respect for the market. When the input is incorrect, then the deal is closed immediately, but when the input is good, then too much greed pales into insignificance. I was satisfied with a small profitable trades and small losses.
Currently, I teach clients trading techniques, discipline and risk management. And my teacher was one of the most prominent traders who worked on the CBOT, - this is David Goldberg. David scalped for a long time spreads on the site for futures trading in wheat and at the same time was head of the company's Goldberg Bros. - This is one of the largest clearing firms of its time on CBOT, CME and the Chicago Board Options Exchange (Chicago Board Options Exchange - CBOE). It was he who taught me the rules of trading discipline. I listened to his advice and eventually worked with increasing success. But now the student became a teacher himself.
Wheel of Success
"The Wheel of Success" as I call it, as applied to trading, consists of three spokes. The first needle - it's content. The content includes all internal and external market information that traders use to make decisions.
The most important type of content - this is inside information about the market. In fact it is about time and price that can be obtained at the exchange. At the end of a day, we all make trading decisions in the present tense and start from the time and money. For effective scalping we need a live stream of quotations, reliable execution and a good trading platform. Without immediate access to price information and the time we'd traded in the dark.
The second arm - it's mechanics. This refers to how you get access to the market and what methods use to open / close the deals. To succeed in trading, you need to master for beginning mechanics. A common mistake on the keyboard can cause thousands of losses. The entire trading day can be ruined because of an error entering the market.
Master the methods of entry into the market and their performance - it's like to learn how to ride a bike. The process of opening and closing is smooth and moves to the level of subconsciousness. Fast and efficient execution of transactions, especially if you skalpiruete will allow you to make a deal with Bid or Ofer before the competition. Remember, the fastest survive.
The third and most important spoke in the "Wheel of Success" - a discipline. If you expect to succeed, without discipline, it can not be achieved. Trading discipline must be 100% of the time - in every transaction, every trading day.
The following is provided 25 of the rules to strengthen the trading discipline, you repeat them always. You need discipline to do their job again and again, tune in to it. Do you want to - believe it or - no, but many of my clients read through these rules before the start of each trading day. It takes no more than three minutes. Think of it as an exercise - a prayer, it reminds you how to behave during the trading session.
Number 1 PAYING MARKET responsibly.
Disciplined trading will bring you more money than take away. On the market you can tell the only truthful thing: discipline = higher profits.
Number 2 BE Discipline EVERY DAY IN EVERY TRANSACTION, AND THE MARKET FOR THIS repay. But do not say that you are trading disciplined, if it is not even 1% of the time.
Market discipline is essential. But this is not the case when you say you quit, for example, smoking. If you all are saying that throw, and shoot themselves on a cigarette, it is evident that the habit you have not got. If you're disciplined and committing nine transactions out of 10, then about any subject is not the question. To spoil the result of the trading day rather undisciplined one transaction. Discipline must be present in each transaction.
When I say that "the market for you to repay it," here we mean the following: you close a losing trade with a smaller loss than stubbornly holding deal until it devastate your score. So, if I lose on the deal $ 200, not $ 1,000, if not shut it down earlier, then we can say that I "saved" $ 800 for the future, hastily closing unprofitable deal.
Number 3 always decreases the lots, if the trade goes BAD.
All good traders follow this rule. Why continue to lose on the positions of five lots (contracts), if you can save money simply by reducing the amount of the next deal? If I happen two consecutive losing trades, then the next I was always reduced to a minimum lot. If the following two are profitable, the volume of transactions increases to normal.
Imagine you're a football player who misses two consecutive terms on the gate. But the next time you just weaken the force of impact, just to set up the sight and reach the target. The same applies to trading: reduce the size of the transaction and earn her a couple of points (or even play at breakeven), but after two such transactions, you can increase your lot.
№ 4 Do not give Trades TURNS loss.
We are all at least once so broke that rule. And we must stand in front of goal - to work so as not to disturb him in the future. We are talking about greed factor. The market was well disposed towards you, and went where you'd expect, but a small profit you are not satisfied. And then you keep the deal in the hope that the price still goes on, as you had hoped, but the market turns around and goes against you. Naturally, you start to vibrate, and in the meantime deal brings greater and greater losses.
You should not be greedy. This is just one of the transactions. During this session you will still have time to open a bunch of transactions, and even more in the future. On the market there is always a possibility. Remember: none of your transactions should not drastically affect the outcome of the day with both positive and negative side. You should not be greedy.
№ 5 THE LARGEST LOSS must not exceed the highest win.
Document every transaction that you make. If, for example, you can see that today is the largest profitable trade brought 50 points, then do not let losing trades exceed these 50 points. Do not let the losses exceed the accumulated profit, as in fact the result of a trading day will be a net loss of two transactions. Is not good.
Number 6 developed his method and work strictly on it. DO NOT CHANGE THE TRADING STRATEGY like a glove.
Usually I ask of my students that they have compiled a list of specific conditions (patterns and models), which need to open the deal. I do not need to know what methods they use, but I want to be in front of them was a list of rules, patterns or patterns of price behavior, which allows you to open the deal. Need to make a game plan.
If you hold a time-tested trading strategy, but today it did not work, drop it and do not look for a new one. If your strategy is effective in more than half the time, then work on it.
Number 7 Be yourself. Should not strive to be someone else.
For all the time in the markets I've never had to open the transaction volume of more than 50 lots. My colleagues, for example, who work on the trading floors, open up the position of 100-200 lots in one go. However, for such huge volumes of transactions I do not have emotional or psychological training. And that's fine. I know that my comfort zone - it's somewhere in the 10-20 lots per trade. A lot if the worker ever exceeds 20, then I instantly "I cut" the deal. Just on an emotional level can not cope with this volume. Such transactions often lead to losses as I find it difficult to trade on the same professional level as that of a transaction in 10 lots.
If we talk about the volume of transactions, and learn how to find work in their comfort zone. You are the one who you are.
Number 8 must always be the solvency of the state to come on the market the next day and continue working.
Do not bring themselves to the precarious state when losing more than you can afford. Worst of all, when you want to trade, but can not because money are fused, and the broker can not trade until you top up your account.
From his students, I demand that every day they have been calculated limit losses. For example, today you can not lose more than $ 500. Once the loss is $ 500, immediately turn off the computer and go to rest until tomorrow. Tomorrow you can always go back to work.
Number 9 right to increase the Lot to be earned.
Too many new traders believe that if they have $ 25,000 in the account, they can open a position for 5-10 contracts for E-mini S & P. There is nothing more absurd. If you can not successfully sell one lot, then why do you think that you will sell ten?
From his students, I demand a profitable trade for ten consecutive days, using only the minimum lot size. When they do trade for ten days in a row only to profit, in my opinion they deserve the right to increase the lot - and so for another 10 days of trading only in earnings.
Remember: If you sell at a loss for the two lots, then reduce to a single work item.
Number 10 OUT OF losers.
You will not be a loser just because now you are running a losing trade. However, you'll be to them, if not close it at the moment, it is recognized that it is unprofitable. I often wonder how accurate market indicator is intuition. If suddenly you have the feeling that a deal can turn into "moose" that so soon will be. It's time to tick, I mean.
There is not a trader who performs only profitable trades. I'm usually happens the day 33% of losing trades, 33% of transactions in a zero (breakeven), and 33% profitable trades. Trades I cut instantly. Is it worth the usually inexpensive. And even if I lose a day or close to zero two-thirds of transactions, you still walk home in the black.
№ 11 FIRST "LOS" - Best "LOS".
Once you feel that an open trade can result in "moose", it is better to close it immediately. "While the deal has not closed - do not call it unprofitable" and "do not worry, the price will come back" - so often say traders working on the sites, and not the fact that they know what they say. Once a trader says this phrase, it becomes clear that he understands the fate of the deal - the price is not coming back, it's time to exit the market.
№ 12 Throw HOPE AND PRAYER. AKA lose.
During his youth, when I was undisciplined trader, many times I prayed, "God market," I can not even count how many times it was. I prayed, hoping to get out of a delicate market situation. I prayed that some deity has intervened in the situation, but it never happened. And then I realized that prayers to 'gods of markets "were godforsaken thing. Just bring down the market!
№ 13 FORGET ABOUT THE NEWS. Is history.
That never understood why so many online merchants all day listening to or watching the news on CNBC, MSNBC, Bloomberg News, FNN, etc. "Talking heads" who are news programs, in fact, too little versed in the dynamics of markets or in the behavior of prices. Only a few of them, and that fact has not had to sell at least one contract at any site or online. But they tend to try to look into his case.
One guy from CNBC, who is now an "expert on markets and trade on them," before the telephone was working as a clerk at the site where there is a trade Treasury bonds. Well, in that case he an expert! Neither he nor the other can bring you benefits. Think of all this, as it is in reality ... as entertainment.
The fact that the stories that get into the program on TV, are already "obsolete". The essence of the news has been reviewed and "employed" professional players long before itself "news" went on the air. Do not trade on news. It is too late.
№ 14 do not speculate. AKA lose.
In all the years that I trade and communicate with traders, I never had to meet a successful speculator. It is impossible to speculate and always make big profitable trades. Do not speculate. Be a trader.
The answer here - a short-term scalping. When you trade in kratkosroke - small gains and losses are even smaller - the probability of a profitable day or a week is much higher.
Number 15 LIKE TO LOSE MONEY.
This rule is very strong reaction. Traders ask: "How is it like to lose money. Yes you crazy? "
No, I'm not crazy. Here we have the following in mind: you have to take for granted the fact that the majority of your transactions will be losses. Trades must be closed immediately. Love the close losing trades without delay. So you will save a huge commercial capital and become a much better trader.
Number 16 IF BASED TRANSACTION timeframe does not work to one side, it's time to close it.
This rule applies to the theory of capital movements. The market moves in either direction due to commercial capital. Excess or imbalance of buy orders will move the market up. The excess of sell orders will move the market down.
When prices stagnate (and it often occurs during the trading session), the market and its participants give us to understand that at this point everyone is happy with the current prices of supply and demand.
At such times, the market is better not to enter. He's just going nowhere. It's a waste of time, capital and emotional energy. It is much better to wait until the market heats up a bit and then just make a deal.
№ 17 NEVER bring matters to a big loss. Only large "Moose" could harm your account.
Please, repeat rule number 5, 8, 10, 11 and 15. If you follow these rules, we will never violate rule number 17.
The big "moose" prevent you finish the day in positive territory. They are at once destroyed many medium-sized profits, on which you are panting all day. The big "moose" and "kill" you from a psychological and emotional point of view. After such a blow confidence is restored, as a rule, very long time.
EARN number 18 a little every day. Dig TRANCHE YOURSELF Do not give them to crumble.
When I was a young trader, set himself the task - to make the day of 10 ticks on the market of Treasury bonds (bonds). One tick - this is $ 31.25, or 10 ticks - that's $ 312.50.
For you it may be, and some, but for me at that time it was a lot of money. My teacher, David Goldberg, who once said that if I'm going to do with 10 ticks each day by the end of the year can earn $ 72 500. It was the 1982 th year, and for the 23-year-old boy it was a crazy amount.
You will be amazed how fast to grow through, if you'll earn every day, drop by drop. If you trade E-mini S & P you are a beginner, try to make at least 5-6 items per day. If you are able to work this way, by the end of the year, your account will grow to $ 72,000.
Number 19 Do not count on big prize.
I have never met a successful speculators, but I was not lucky enough to meet a trader who opens a deal with the expectation of a big win, and eventually it gets. Do not treat the transaction as a potential big win. Sometimes they come across, but more often the cause is good luck rather than skill trader.
For example, I expect to receive a regular high profits from the deal, but when the deal is working, at the behest of the case on the market comes news from the Fed, and in the end, I hung a big profit - not yet taken. This has happened to me no more than five times over the past 20 years.
Sequence number 20 gives confidence and strengthen controls.
Agree, always nice to include a computer in the morning and be sure that if you play by the rules and discipline to follow your trading system, the probability of success is very high.
I've had years when the number of losing days could be counted on the fingers of one hand. With such stability, I became more and more confident. I knew that I would make money every day. And how could it be otherwise? The ability to earn a little bit every day (rule number 18 and 19) will allow you to work confidently and maintain control over the situation.
Remember rule number 9 - if you earn a little bit every day, then eventually get the right to increase the lot. In the end, thanks to a discipline of your "little bit" in the future will become a much larger profits.
Number 21 LEARNING squeeze Trades on a maximum (partial closure of positions).
Due to the partial closure of profitable positions you will increase the average size of a profitable trade, as well as save the amount of damages to an acceptable level.
Never cover the losing trades in parts. If the worker lot more than the minimum, and the current transaction is unprofitable, then close the entire position at once. If the worker lot more than the minimum, and the current transaction is profitable, then the first half of the close of the transaction price reaches the target area.
If you use stop-loss after the close of the first part of the position put it to breakeven. In fact you're playing now "tipped" money. On the remainder of the position you can not lose - it's the best situation that can be created. Put a limit on withdrawals of profit in a few points from the current price and relax.
Number 22 completed the same SEEKS DEAL - STAY mason.
Every day, coming to work, a mason working on the same circuit - he raises at home laying brick on brick on brick, and so on to infinity. The same consistency applies to traders. Repeat the rule number 6 and 20. For 20 years I have been working on the same trading system. Actually, as the same mason.
Number 23 is not surprising, with the analysis. DO NOT DELAY. I have no doubt. AKA lose.
It is hard to count how many times I have come to traders in a terribly depressed, because, they said, they "know" where to go market, but have not opened position. And when I asked why they did not open a transaction, the answer was always the same - they did not want to chase the market and open to going wave. Either they had expected the trade at the best price (the price there and did not return), or only two of the three indicators confirmed the deal, and the trader is waiting for confirmation from the third.
The end result of delay and doubt - it's rightness trader relative to the direction of the market and zero profit on the balance sheet. In our business there is no fee until you open the trade. You do not need too much focus on the analysis of the potential transaction. Open it and then gently lead. If this error occurs, exit the market. But you'll never be right until you open the transaction.
Number 24 before the market all traders are EQUAL.
We all have our day begins with the same. From scratch. From the moment you hear the bell and start bidding, the result of the day will determine our behavior. If you follow the 25 rules, then you will succeed. And if not - you lose.
№ 25 SCALES OF JUSTICE IN THE HANDS OF THE MARKET.
The market goes where he wants. He spit on you or me. His favorites either. For him there is no difference. He never causes someone willful. The market is always right.
And you must learn to respect the market. The market relentlessly punishes those who do not play by the rules. Train yourself to obey the 25 rules of trading discipline, and compensation will not be long in coming.
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