Tested Classic Trading Rules - Part 1 of 12

1. Plan your trades and trade your plans.
2. Hope and fear are the two greatest enemies of speculators.
3. Keep records of your trading results.
4. Maintain a positive attitude no matter how much you lose.
5. Avoid overconfidence——it could be your greatest enemy.
6. Continually set higher trading goals.
7. Stops are the key to success for many traders——limit your losses!
8. The most successful traders are those that trade long term.
9. Successful traders buy into bad news ＆ sell into good news.
10. The successful trader is not afraid to buy high ＆ sell low.

Ten Trading Mistakes

1. Refusing to define a loss.

2. Not liquidating a losing trade, even after you have acknowledged the trade's potential is greatly diminished.

3. Getting locked into a specific opinion or belief about market direction. From a psychological perspective this is equivalent to trying to control the market with your expectation of what it will do: "I'm right, the market is wrong."

4. Focusing on price and the monetary value of a trade, instead of the potential for the market to move based on its behavior and structure.

5. Revenge-trading as if you were trying get back at the market for what it took away from you.

6. Not reversing your position even when you clearly sense a change in market direction.

7. Not following the rules of the trading system.

8. Planning for a move or feeling one building, but then finding yourself immobilized to hit the bid or offer, and therefore denying yourself the opportunity to profit.

9. Not acting on your instincts or intuition.

10. Establishing a consistent pattern of trading success over a period of time, and then giving your winnings back to the market in one or two trades and starting the cycle over again.

From The Disciplined Trader,Mark Douglas

The Ten Trading Commandments

1) Trade for success not for money.

2) Strive for discipline.

3) Know yourself and how well you handle risk.

4) Lose your ego.

5) Know your risk level and when you hit your stop point exit the trade.

6) Know when to trade and when to wait.

7) Love your losers like you love your winners.

8) Losing trades will be your best teachers.

9) After three losing trades in a row, take a break.

10) Don't break any of the above nin rules.

Tested Classic Trading Rules - Part 13 of 13

121. When the market breaks through a weekly or monthly high, it is a buy signal. When it breaks through the previous weekly or monthly low, it is a sell signal.
122. Every sunken ship has a chart.
123. Take a trading break. A break will give you a detached view of the market and a fresh look at yourself and the way you want to trade for the next several weeks.
124. Assimilate into your very bones a set of trading rules that works for you.
125. The final phase in a bull move is an accelerated runaway near the top. In this phase, the market always makes you believe that you have underestimated the potential bull market. The temptation to continue pyramiding your position is strong as profits have now swelled to the point that you believe your account can stand any setback. It is imperative at this juncture to take profits on your pyramids and reduce the position back to base levels. The base position is then liquidated when it becomes apparent that the move has ended

Tested Classic Trading Rules - Part 12 of 13

111. Life never happens in a straight line. Any adult knows this. But we can too easily be hypnotized into forgetting it when contemplating a chart. Beware of the chartist’s illusion.
112. Optimism means expecting the best, but confidence means knowing how you will handle the worst. Never make a move if you are merely optimistic.
113. Whatever you do, whether you bet with the herd or against, think it through independently first.
114. Repeatedly reevaluate your open positions. Keep asking yourself: would I put my money into this if it were presented to me for the first time today? Is this trade progressing toward the ending position I envisioned?
115. It is a safe bet that the money lost by (short term) speculation is small compared with the gigantic sums lost by those who let their investments “ride”. Long term investors are the biggest gamblers as after they make a trade they often times stay with it and end up losing it all. The intelligent trader will . By acting promptly—hold losses to a minimum.
116. As a rule of thumb good trend lines should touch at least three previous highs or lows. The more points the line catches, the better the line.
117. Volume and open interest are as important to the technician as price.
118. The clearest and easiest way to determine a trend is from previous highs and lows. Higher highs and higher lows mark an uptrend, lower highs and lower lows mark a downtrend.
119. Don’t sell a quiet market after a fall because a low volume sell－off is actually a very bullish situation.
120. Prices are made in the minds of men, not in the soybean field: fear and greed can temporarily drive prices far beyond their so called real value.

Tested Classic Trading Rules - Part 11 of 12

101. “If you get in on Jones’ tip; get out on Jones’ tip”. If you are riding another person’s idea, ride it all the way.
102. Run early or not at all. Don’t be an eleven o’clock bull or a five o’clock bear.
103. Woodrow Wilson said, “a governments first priority is to organize the common interest against special interests”. Successful traders seek out market opportunities capitalizing on the reality that government’s first priority is rarely achieved.
104. People who buy headlines eventually end up selling newspapers.
105. If you do not know who you are, the market is an expensive place to find out.
106. Never give advice—the smart don’t need it and the stupid don’t heed it.
107. Disregard all prognostications. In the world of money, which is a world shaped by human behavior, nobody has the foggiest notion of what will happen in the future. Mark that word—nobody! Thus the successful trader bases no moves on what supposedly will happen but reacts instead to what does happen.
108. Worry is not a sickness but a sign of health. If you are not worried, you are not risking enough.
109. Except in unusual circumstances, get in the habit of taking your profit too soon. Don’t torment yourself if a trade continues winning without you. Chances are it won’t continue long. If it does console yourself by thinking of all the times when liquidating early preserved gains you would otherwise have lost.
110. When the ship starts to sink, don’t pray—jump!

Tested Classic Trading Rules - Part 10 of 12

91. In a bear market, it is always wise to cover if complete demoralization suddenly develops.
92. The principles of successful commodity speculation is based on the supposition that people will continue in the future to make the mistakes that they have made in the past.
93. In a bull market and particularly in booms, the public at first makes money, which it later looses simply by overstaying the bull market.
94. A bull market needs to be fed every day ， a bear market only once a week.
95. Never underestimatehow much time is necessary to wash out a market that is long.
96. Never buy the first rally and never sell the first break.
97. Be advised that it is better to be more interested in the market’s reaction to new information than in the piece of news itself.
98. Don’t diversify ， concentrate on a few commodities. More diversity reduces amount you can speculate with. Also too much to watch.
99. Don’t pioneer highs or lows. Let the market tell you a high or low has been made.
100. Keep some perspective. Trees don’t grow to the sky. Values don’t go to zero. What are histories and recent highs and lows， Loan levels， Loans are not necessarily price floors. CCC selling prices aren’t necessarily price ceilings.

Tested Classic Trading Rules - Part 8 of 12

71.Remember that it’s better to trade a few big moves a year (and close them out profitably) than to trade constantly.
72.Set an objective for each trade you enter and get out when you meet it. Don’t be greedy!
73.Remember that for many commodities ，politics are more important than economics.
74.Never add to a losing position.
75.Beware of trying to pick tops or bottoms.
76. Worry about how much you can lose. Figure risk reward ratio ahead of trade. Strive for at least 3x potential profit vs. loss.
77. If it appears that lots of bulls are long ， be nervous!
78. If you have a good lead in the market and all the news seems too good to be true you’d better take profits.
79. The news always follows the market.
80. There is only one side to the market; and it is not the bull side or the bear side, but the right side.

Tested Classic Trading Rules - Part 7 of 12

61.If a market doesn’t do what you think it should and you’re tired of waiting ， you’d better be out of it.
62.Stay calm and maintain clear thinking when trading big positions.
63.Reevaluate your position in the market if charts have deteriorated and fundamentals have not developed as you expected.
64.Above all be mentally prepared for the rigors of each trading day from the time you get up each morning until you go to bed at night.
65.Do whatever is necessary to stay on top of the markets you are trading.
66.Believe that the market is stronger than you are. Do not try to fight the market.
67.Beware of large positions that can control your emotions and feelings. In other words don’t be overly aggressive with the market. Treat it gently by allowing your equity to grow steadily rather than in bursts.
68.Capital preservation is just as important as capital appreciation.
69.When a market’s gotten away and you’ve missed the first leg you should still consider jumping in even if it is dangerous and difficult.
70.Work hard at understanding the key factor(s) motivating the market(s) you are trading. In other words, the harder you work the luckier you’ll be.

Tested Classic Trading Rules - Part 6 of 12

51.Commodity trading is the art of regarding fear as the greatest sin and giving up as the greatest mistake. It is the art of accepting failure as a step toward victory.
52.Have you taken a loss? Forget it quick. If you have taken a profit, forget it quicker. Don’t let ego and greed inhibit clear thinking and hard work.
53.The characteristics of realizing bull market are:
a.a fundamental bullish situation
b.a reluctance by specs to buy
c.an inversion or small carrying charge between cash and futures
d.business interests are either cautious or bullish
54.Always remember that weather markets are mercurial, extreme in price fluctuations, and very difficult to master. Forecasts of weather beyond a few days are not reliable.
55.One cannot do anything about yesterday. When one door closes, another door opens. The greater opportunity nearly always lies through the open door.
56.The deepest secret for the trader is to subordinate his will to the will of the market. The market is truth as it reflects all forces that bear upon it. As long as he recognizes this, he is safe. When he ignores it, he is lost.
57.Somewhere a change is occurring that can make you rich.
58.Beware of “fools disease” (i.e. Waiting for trades that you’re sure are 100 pct profitable.) It is better never to let yourself believe that you are 100 pct sure of anything.
59.A known fundamental is a useless fundamental.
60.Major trends are seldom broken unless market goes against trend for more than 3 consecutive days.

Tested Classic Trading Rules - Part 5 of 12

41. Since there is always the possibility of surprise in thin, dead markets, less capital should be risked there than in markets which are broad and moving.
42. Limit the risk in any one trade to a maximum of 10％ and the risk in all open trades to a maximum of 25％ of trading capital. (risk = pct of available capital). Determine this each day, adding profits and subtracting losses in open trades, and combine this net figure with your trading capital.
43. It does not take much capital to trade a market if one has knowledge and understanding. St. Paul said, “when I am weak I am strong.”
44. Speech may be silver but “Silence is Golden”. Traders with the golden touch do not talk.
45. Common trading errors include: A) trading without good reasons. B) trading on hope rather than facts. C) overloading without regard for capital.
46. “I like the short side of the market because there is usually less company”. The mob is usually wrong. It is usually long.
47. A fatal mistake made by the fundamental trader is to take small profits. This is the result of limited vision ??? extremes always seem silly to men of so called good judgment.
48. Trade only when you have a good reason on an appraisal of fundamentals and using chart action for confirmation and timing of entry and exit.
49. Believe that “the big one is possible” ——be there when it starts. Have the gross power to act, be rested mentally and physically, and finally let your profits run and cut your losses quickly.
50. Dream big dreams and think tall. Very few people set goals too high. A man becomes what he thinks about all day long.

Tested Classic Trading Rules - Part 4 of 12

31. The one essential ingredient to making money with money and keeping it is having an organized effort.
32. Unless you progress, you go backwards. Once you complete a trading goal it is crucial that you immediately set a new goal.
33. The art of concentration can help you become a great trader. In other words, set aside time to think, plan, meditate, investigate, research, analyze, evaluate and select your trades carefully.
34. Split your profits right down the middle and never risk more than 50％ of them again in the market.
35. The key to successful trading is in knowing yourself and in knowing your stress point.
36. The real difference between winners and losers is not so much native ability as it is discipline exercised in avoiding mistakes.
37. The greatest risk for a commodity trader is to rely on hope alone. Never substitute hope for facts. The greatest loss is loss of self－confidence.
38. You cannot perform very well for very long with your shoes nailed to the floor. In trading as in fencing there are the quick and the dead.
39. Remember Mark Twain: “only 10％ of the people think. 10％ think they think. The other 80％ would rather die than think.”
40. The man who goes to the top as a commodity trader does not do as he pleases. He has trained himself to choose correctly between the two freedoms: the freedom to do as he pleases, and the freedom to do what he must do.

The Ten Cardinal Rules

1. Learn to function in a tense, unstructured, and unpredictable environment.

2. Be an independent thinker versus a conventional thinker.

3. Work out a way to handle your emotions and maintain objectivity.

4. Don't rely on hope and fear in the conventional sense.

5. Work continuously to improve yourself, giving importance to self-examination and recognizing that your personality and way of responding to events are a critical part of the game. This requires continuous coaching.

6. Modify your normal responses to certain events.

7. Be willing to face problems, understand them, and recognize that they are in some way related to your behavior.

8. Know when problems can be resolved and then apply methods to solve them. That may mean giving up some control in order to gain a different control. It may mean changes in your personality, learning self-reliance, or giving up independence and ego to become part of a trading team.

9. Understand the larger framework in which trading occurs— how the complexity of the marketplace and your personality both must be taken into account in order to develop the mastery of trading.

10. Develop the right mind-set for trading—a willingness to commit to the kinds of changes in personal habits and beliefs that will drastically alter your life. To do this requires a willingness to surrender to the forces of the game. In order to be able to play at a maximum level, you have to let go of your ego and your need to have things your way.

----Trading to Win, Ari Kiev

Tested Classic Trading Rules - Part 3 of 12

21. The basic substance of price change is human emotion. Panic, fear, greed, insecurity, anxiety, stress, and uncertainty are the primary sources of short－term price change.
22. Bullish consensus is typically at its high when the market is at a top. Also there are few bulls at major bottoms.
23. Watch the spreads i.e., don't be bullish if inverses are narrowing.
24. Remember that a bear market will give up in one month what a bull market has taken 3 months to build.
25. Identify “the dominant factor” in each commodity. Be prepared to redefine this factor as conditions change.
26. Expand your sources for market info but limit your sources for market opinion.
27. Don’t ever allow a big winning trade to turn into a loser. Stop yourself out if market moves against you 20％ from your peak profit point.
28. It is never possible to know everything about anything. A commodity trader is in constant danger.
29. Successful trading requires four things. Knowledge, disciplined courage, money, and the energy to merge the first 3 properly.
30. Expect and accept losses gracefully. Those who brood over losses always miss the next opportunity, which more than likely will be profitable.

Tested Classic Trading Rules - Part 2 of 12

11. Successful traders have a well scheduled planned time for studying the markets.
12. Successful traders set profit objectives for each trade they enter.
13. Do not collect the opinions of others before entering trades——facts are priceless——opinions are worthless. In short successful traders isolate themselves from the opinions of others.
14. Continually strive for patience, perseverance, determination, and rational action.
15. Never get out of the market just because you have lost patience or get into the market because you are anxious from waiting.
16. Avoid getting in or out of the market too often.
17. The most profitable trading tool is simply following the trend.
18. Never change your position in the market without a good reason. When you make a trade, let it be for some good reason or according to a definite plan; then do not get out without a definite indication of a change in trend.
19. Losses make the speculator studious——not profits. Take advantage of every loss to improve your knowledge of market action.
20. The most difficult task in speculation is not prediction but self－control. Successful trading is difficult and frustrating. You are the most important element in the success equation.