12 Trading Rules

Over the weekend I was sorting through my old trading diary from many years ago and came across some notes regarding something I read by Joe DiNapoli on trading and the importance of having a game plan. Although I don't have an exact copy of what I was referring to (I have only hand-written notes here), I thought I would share my notes.

According to Joe, here are'd 12 rules to trade by:

1. Loss of opportunity is preferable to loss of capital

2. Picking safe, readable, and ultimately high probability trades is the way to go

3. Use logical profit objectives for all positions. Know your exits and stick to them

4. Markets are squirrelly animals - make your trading plans ahead of the market

5. Don't buy new highs or sell new lows - wait for the market to come to you. Buy retracements. If you miss the train, don't beat yourself up - another one will come by shortly

6. Above all, follow your own trading plan and no one else's

7. Trade quietly - with the exception of a mentor, tell no one about your positions, profits, or losses. This is especially true for those who are close to you, like your wife, husband, or friends. This self-gratification process or sharing process will put you under psychological pressure to win on every trade and can be a primary reason for failure to follow your plan

8. Don't carry a sizeable position when traveling. The market will always catch you off guard at the most inopportune time

9. You are only one trade from humility. A swelled head does not belong on a trader's shoulders

10. Add to your knowledge before attempting to add to your wallet. Newbie traders think they can become pros with little more than a computer and hope. In this business, hope is a four letter word. Show me a humble trader, and I'll show you someone ready to learn

11. Develop your sense of humor - you'll definitely need it

12. Help other traders whenever you can. This is more practical than philosophical - giving keeps the ego in line and when you need help, and you will, you'll find it.