Business

21. LEARN TO SWEAT OUT (SCALE OUT) YOUR WINNERS.
The net effect of scaling out of your winners will be an increased average win per trade while keeping your losses to your pre-defined risk parameters. You should never scale out of your losers. If your trade size is more than a one lot and your trade is a loser, you must exit the entire position en masse. If your trade size is more than a one lot and your trade is a winner, it is best to exit one-half of your position at your first price target.

If you trade with protective stop-loss orders, you should amend the order to reflect the change in trade size (remember you have exited onehalf of your position) and raise or lower the stop price, depending on whether its a long or short position, to your original initiating trade entry price. You now are essentially playing with the houses money.

You cant lose on the remaining position, and that’s obviously a fantastic position in which to put yourself. Place a limit order a few tics above or below the market, depending on your position, sit back and relax.

22. MAKE THE SAME TYPE OF TRADES OVER AND OVER AGAIN – BE A BRICKLAYER.
A bricklayer shows up for work every day of his working life and executes with the
same methodology brick by brick by brick. The same consistency applies to traders, as well. Please review Rules #6 and #20. I have not changed my trading methodology and execution strategy in 20 years. I guess I’m the bricklayer.

23. DON’T OVER-ANALYZE. DON’T PROCRASTINATE. DON’T HESITATE. IF YOU DO,YOU WILL LOSE.
I cant tell you how many times traders have come into my office terribly depressed because they knew the market was going one way or another; however, they failed to put a position on. When I ask them why they did not put the trade on, their responses are always the same:

they did not want to chase the market. They were waiting to be filled at the absolute best possible price (and never got filled), or only two out of three of their market indicators were present and they were waiting for the third. The net result of all this procrastination and hesitation is the trader was correct in
deducing market direction but his profit on the trade was zero. We dont get paid in this business unless we put the trade on. Don’t overanalyze the trade. Place the trade and then manage it. If youre wrong, get out. But youll never be right unless you actually make the trade.

24. ALL TRADERS ARE CREATED EQUAL IN THE EYES OF THE MARKET.
We all start out the day the same. We all start out at zero. Once the bell
rings and trading begins, its how we conduct ourselves from a behavioral standpoint that will dictate whether or not we will make money on the day. If you follow the 25 Rules, you should do well. If you do not, you will do poorly.

25. IT’S THE MARKET ITSELF THAT WIELDS THE ULTIMATE SCALE OF JUSTICE.
The market moves wherever it wants to go. It does not care about you or me. It
does not play favorites. It does not discriminate. It does not intentionally harm any one individual. The market is always right.

You must learn to respect the market. The market will mercilessly punish you if you do not play by the Rules. Learn to condition yourself to play by the 25 Rules of Trading Discipline and you will be rewarded. (Douglas E. Zalesky)