Rules to be a successful trader?

<p id="isPasted"><strong>-PROCESS</strong></p><p>The process is a set of rules that you have to follow to decide when to enter a position and when to exit a position. You can either develop your own sets of rules by trial and error or use existing sets of rules developed by other people/companies.</p><p>The advantage of developing your own set of rules is that it is perfectly tailored to your psychology and personality. But it takes time and money to develop this set of rules.</p><p>The advantage of using others' sets of rules is it is faster and cheaper to get access to a proven process. But it may not perfectly match your psychology and personality. You need to re-adapt it a bit to match your psychology.</p><p>Those sets of rules make what I call the&nbsp;TRADING SYSTEM.</p><p><strong>-HARD WORK</strong></p><p>Nowadays you see a lot of traders posting on social media trading sessions on the beach, etc...it looks easy but they never show you the hard work they have put on themselves to become profitable. I am pretty sure that they have worked like crazy, they have been extremely disciplined and patient to become profitable.</p><p>Before becoming profitable, this requires a lot and a lot of hard work and sacrifice.</p><p><strong>-SET OF SKILLS</strong></p><p>Trading has never been a prediction game. First of all, because nobody can predict the future. Trading is a follower game. As a trader, you have to sit, observe, and try to identify the psychology of the big traders on the market and follow them. Traders follow the movement but never predict the movement.</p>

<p id="isPasted">Successful trading is a combination of disciplined risk management, a sound methodology, and a strong psychological mindset. It is a business, not a game of chance, and requires a structured, consistent approach to generate long-term profitability.&nbsp;</p><p><strong>Foundational Principles</strong></p><ul><li>Develop a Comprehensive Trading Plan: Before placing any trade, have a clear, written plan that outlines your goals, entry and exit criteria, and risk management rules. This plan acts as your guide during market volatility, helping to prevent impulsive decisions.</li><li>Treat Trading as a Business: Approach trading with professionalism, not as a casual hobby. This means maintaining detailed records, setting aside specific trading capital (not funds needed for monthly expenses), and conducting regular performance reviews.</li><li>Prioritize Capital Preservation: Your primary goal is to stay in the game long-term. Focus on protecting your capital first and profits second. Never risk money you cannot afford to lose. </li></ul><p><strong>Risk Management Rules</strong></p><ul><li>Always Use Stop-Loss Orders: Predetermine a price level at which you will automatically exit a losing trade. A common practice is the 1% to 2% rule, where you risk no more than this percentage of your total trading capital on any single trade.</li><li>Maintain a Favorable Risk/Reward Ratio: Ensure potential profits are significantly higher than potential losses for every trade (e.g., aiming for a 2:1 or 3:1 ratio).</li><li>Diversify Your Portfolio: Spread investments across different assets or sectors to avoid being overexposed to a single market event.</li><li>Never Average Down: Avoid adding more money to a losing position in the hope that it will turn around, as this can lead to massive losses. </li></ul><p><strong>Psychology and Discipline</strong></p><ul><li>Control Emotions: Fear and greed are the biggest enemies of a trader. Successful traders focus on executing their plan correctly, not on emotional reactions to profits or losses.</li><li>Practice Patience: The best opportunities come rarely. Be willing to wait for high-probability setups that align with your strategy rather than forcing trades out of boredom or a fear of missing out (FOMO).</li><li>Maintain a Trading Journal: Regularly document every trade, including the reason for entry/exit and your emotional state at the time. Reviewing this journal helps identify patterns, learn from mistakes, and refine your approach.</li><li>Continuously Learn and Adapt: The markets are always changing, so successful traders are perpetual students, adapting their strategies based on new information and market conditions. </li></ul>