12 commandments pdf

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The 12 Commandments

Of Trading

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Today’s Agenda

Why Trader’s Fail

Review the 12 Commandments of Trading

Q&A

www.traderslaboratory.com

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Why Traders Fail

Trading System

MoneyManagement

Trade

Psychology

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I. Thou Shalt Treat Every Trade as a Single –

NOT a Home Run

• Too Excited about Winners

• Too Depressed about Losers

• Trading should never be treated as a Race or a

Marathon – It’s a long journey

• No One Trade Should Matter That Much in the “Grand

Scheme”

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II. Never Force a Trade – Take a Snapshot

• Never Get Overwhelmed into action for fear of missing a move• Don’t Speculate – Trade Only on 100% Confirmation of Your Trade

• Accept you’ll miss some moves in exchange for missing losses as

well

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III. Unplug…When It’s Time to Trade

• Turn of the Chat• Don’t Go to Blogs

• Turn off CNBC

• IM, Facebook, Twitter, Email

• News Analysis, Fundamentals, Rumors

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IV. Put the Odds in Your Favor on Every Trade

• Stack the Odds then Let the Market do its thing• You have zero influence on the outcome once tradeplaced

• There’s no…Hoping, Wishing, Praying or Crying inTrading

• Competence leads to Confidence• “It doesn’t matter whether you win or lose, it matters how

much you make when you’re right, and how much youlose when you’re wrong” George Soros

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V. Trade for Profit

• This should be your top reason for trading• This should be your mantra when you reach the 90% level on your

trades

• Don’t stumble over a few extra pips

• This should be the reason you follow the rules and avoid breaking

them

• “Greed is Good” only in the Movies

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VI. Check Your Ego at the Door 

• You will be bruised and battered• You must accept your loss – EXIT – Move On

• Give up the need to be always right

• You can be wrong daily and a big winner 

• Sorry, Nobody cares

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VII. Stop Making Excuses

• The Blame Game…• The Broker 

• The System

• The Internet, Charting, Data

• Wife, Husband, the Dog, the weather, your bad luck, conspiracies

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VIII. Minimal Leverage = Maximized Success

• Most Trade Forex Opposite – Maximize Leverage = Wipeout &Refund Account Cycle

• 3.8 Wipeouts on Average/Account Holder 

• 1% - 5% Maximum Risk…or less

• Futures, Options Similar 

• Biggest accounts risk least, smallest want to risk the most…WHY?

• Understand the Three Legged Stool – System, Risk, Psychology

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IX. Follow The 25 Trade Test

• A “rites of passage”• Forces you to learn the rules

• Forces you to back-test (or face doing it in real-time with real

money)

• Forces you to experience wins, losses, trade for profits, near

misses, and most emotions

• You will master the system

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X. Always Have Success Mentors

• Learn on the Forums• Do the work, learn from proven traders

• Do watch the Videos, Read the Blog

• Do Attend training webinars (content)

• Consider One-on-One Coaching

• 10,000 Hour Rule “Ultra Fast”

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XI. Do Not Over Diversify in Forex

• Many Forex Markets Move in Tandem• Understand their underlying correlation

• It is not like trading stocks or managing a large portfolio

• 2-5 Markets Max is the Sweet Spot

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XII. Have Fun

• Making Money• Be Your Own Boss

• Double Business by Changing One Number 

• Ultimate Challenge Mentally & Psychologically

• Freedom & Independence

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Questions & Answers

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