As usual, we will try to keep the rules simple. But, before we define the rules for ourselves lets try to understand the overall rules of the game.
This is the only game where you play against yourself,
you decide when the bout ends and, whether you WIN or LOSE
OR you can play till death (of your investment account).
Rest assured, you will be the only one who will get butchered if you decide to play till end.
You Win Some, You Lose Some. Key is to ride your winners and cut your losses.
Hope you understand so, lets get back to the rules.
1. TRADE-PLAN : Have an objective trade-plan which should clearly outline the entry & exit criteria (Target Profit (TP) OR Stop Loss (SL). Most importantly, follow the plan without any excuses unless any changes in macro events which follies your trade-plan basis.
2. RISK REWARD : Maintain a minimum criteria of 1:2 for Risk (SL) Reward (TP) ratio. This will ensure that with even 40% winning probability of your system you will still be in the game.
3. Trading Journal : A Trading Journal would help, actually is a must. Monitor your trades at pre-defined time intervals. Jot down your thought process throughout the trade cycle right from entry to exit in the journal and review it regularly.
4. Goals & Objectives : Have a appraisal system in place & appraise yourself against the set G&O’s, the measurement criteria should be absolute numbers be it $$$ OR % of your seed trading capital.
5. Payout : Pay yourself for all the efforts you’ve put into the venture. Kick start the payouts after 3/6 months into trading. Have a set % payout every month, ideally it should be between 2 to 5% of your seed trading capital based on your trading plan expectations. If your ahead in the game the 50% of the payout can be splurged and 50% goes into low risk investment else all 100% goes into low risk investment. This will ensure that during the losing times you will be restricted by the trading capital and will only venture into selective high probability trades.
you decide when the bout ends and, whether you WIN or LOSE
OR you can play till death (of your investment account).
Rest assured, you will be the only one who will get butchered if you decide to play till end.
You Win Some, You Lose Some. Key is to ride your winners and cut your losses.
Hope you understand so, lets get back to the rules.
1. TRADE-PLAN : Have an objective trade-plan which should clearly outline the entry & exit criteria (Target Profit (TP) OR Stop Loss (SL). Most importantly, follow the plan without any excuses unless any changes in macro events which follies your trade-plan basis.
2. RISK REWARD : Maintain a minimum criteria of 1:2 for Risk (SL) Reward (TP) ratio. This will ensure that with even 40% winning probability of your system you will still be in the game.
3. Trading Journal : A Trading Journal would help, actually is a must. Monitor your trades at pre-defined time intervals. Jot down your thought process throughout the trade cycle right from entry to exit in the journal and review it regularly.
4. Goals & Objectives : Have a appraisal system in place & appraise yourself against the set G&O’s, the measurement criteria should be absolute numbers be it $$$ OR % of your seed trading capital.
5. Payout : Pay yourself for all the efforts you’ve put into the venture. Kick start the payouts after 3/6 months into trading. Have a set % payout every month, ideally it should be between 2 to 5% of your seed trading capital based on your trading plan expectations. If your ahead in the game the 50% of the payout can be splurged and 50% goes into low risk investment else all 100% goes into low risk investment. This will ensure that during the losing times you will be restricted by the trading capital and will only venture into selective high probability trades.
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