Trading Tips part 2

 #6. NEVER AVERAGE DOWN. EVER!

This follows on from rule No. 5. Commit both these ‘sins’ and you run the very real risk of a blow-up. The compiler of this document decided to put this theory to the test and lost 70% of his account on just one trade lasting 24 hours. Averaging down is a tactic

deployed by long term buy and hold investors and should never be practiced by traders. If the trade goes against you, get out fast. Never average down.

#7. KEEP EXCELLENT RECORDS!

Strategically, it is essential to keep records of all your trades. Not just the profit and loss, but also the reasons why you did what you did when you did. Additionally, many traders keep a journal to record how they felt about each trade. Records act as your personal GPS device and enable you to determine how well you are sticking to your plan.

#8. MAINTAIN DISCIPLINE!

Keeping excellent records will also enable you to see at a glance just how disciplined you are in your trading. Failure to address issues of self-discipline will, almost certainly, be reflected in your trading performance. If you fail consistently in this regard, you have two options: 1. Consider switching to a mechanical strategy, as computers have an exemplary track record when it comes to discipline. 2. Give up trading – it is not for you.

#9. KEEP IT SIMPLE!

Many top professionals use disarmingly simple strategies that are executed with the bare minimum of indicators. Their focus is to maintain their self-discipline and to trade according to their plan. Make it easy on yourself and keep everything as simple as possible.

#10. PLAN THE TRADE – TRADE THE PLAN!

Trading is not gambling; it is a business. However, the trader who enters the markets without a well conceived, detailed and thoroughly tested trading plan, is no better off than the punter who throws darts at a board blindfolded in order to determine which horse to back.