Following these simple 15 trading rules will help make you a more profitable trader and help you keep your trading profits...

1. Never put up trading money you can't afford to lose.
Never trade with your house payment, rent, car payment, etc. Never mortgage your property for trading capital. You are playing with fire if you violate the first rule of trading. The fact will always remain that you can or may lose a good portion or even all of your trading capital. This is why rule #1 is so important.

2. Keep your trading costs down.
There are many great brokers that offer low cost commissions, with great service and excellent trade executions. If you are a high volume trader or a frequent trader, you can save a good sum of many just by trading with a different broker. Sometimes the difference between being profitable and trading with a loss can be the cost of commissions. Explore your options, check out several brokers.

3. Be a student of the markets. Learn and use both Technical Analysis and Fundamental Analysis.
The top pros in every profession are constantly trying to improve their game. Trading is no different. It is one of the most competitive industries in the world with some of the brighest people involved in it. You should constantly be a "student" of the market(s) you are involved in. Constantly learning and improving your edge. Don't rely only on Technical Analysis or just Fundamental Analysis. Although you may focus on one, understand how both pictures can influence the market.

4. Do your own homework.
Never trade solely on someone else's suggestion or tips. Study methods are markets that you are unfamiliar with completely for YOURSELF before you put trust in it. Understand the idiosyncracies of the signals of each before you trade with it. Be responsible for your own decisions.

5. Pick your spots to enter the market. Do not enter the market blindly just because it's moving.
Find your entry points based on careful evaluation and analysis. Don't rush into a market just because it is moving up or down right now. Markets have a tendency to move back to retracement levels. Find an entry point based on careful analysis and stick with it. Then make small adjustments if you do not get the fill you want... but, NEVER chase a market just to get in...just find another entry point. Chasing markets usually end up being very costly.

6. Have your gameplan in advance. Don't make it up along the way.
This goes along with rule #5. Have an overall trading game plan, and a plan for each particular trade, and stick with it. Realize trading plans involve time of entry, price of entry, contingency plans, price and time of profit and total time anticipated for the trade, along with stop loss plans. And those are just the basics. Without at least, these basics involved in each trade, you are trading haphazardly, and possibly blind.

7. Always use protective stops.
A Chicago floor trader once told me..."Always keep your powder dry...You need your ammo for the next fight." In other words, if you blow all of your capital or most of it on one trade, you won't be around to trade another day. Trading opportunities come and go, but they will always appear again in the future. Always use protective stops so that you will have capital for that next trade.

8. Always use price profit targets to close part or all of your position.
A good rule of thumb is to take half of your position off the table if you are fortunate enough to be on a trade that doubles in value. This way you get your initial capital back, and still have money on the table for the trade to mature even more. A better rule of thumb is to take all of your money if you realize a double in a very quick amount of time, and then reconsider and re-evaluate the market and your options.

9. Never let a winning postion turn into a money losing trade.
If you use stops and move them along with profitable winning positions you can protect your profits. For example, if you are long only move your stops UP, if you are short, only move your stops DOWN. Move your stops only in the direction of the PROFIT. Not the other way around. Also...

10. Never let a "pre-stopped loss" turn into a bigger loss.
The brother of rule #9...Never let a small loss turn into a bigger loss. Never let a pre-determined stop loss turn into a larger losing trade. Get out when your stop is hit. Never widen your stops on a losing trade, just to stay in the trade. By changing your stop you are potentially opening the door for a much larger loss and you are deviating from your trading plan. Don't do it. Never let a potentially small loss turn into a potentially big loss.

> Continued Read Part 2 of Trading Rules to Live By

> Go Back to Trading Methods and Trading Tactics

*DISCLOSURE: This is not a solicitation to buy or sell securities. These are NOT recommendations to buy or sell stocks or to invest or trade in any stock, or any other financial instruments. The information above is not intended to offer any professional investing or trading advice. This website is not compensated by any of the companies to promote their stocks. These are just personal opinions. Trading Pro Files is NOT responsible for any investment or trading decisions that anyone may make based on any information received from this website, or any affiliated site, or from any links on the Trading Pro Files website(s). When investing or trading in any financial instrument, always excercise extensive due diligence, and investigate any investment or trade completely prior to commiting any money. Consult with a financial professional. Know your risk and understand that any financial trading and investing inherently involves RISK, and with this risk there is a potential to lose a substantial amount of money.

Disclaimer(s) - Trading and investing involves a high degree of financial risk. There is risk of significant financial loss when investing and trading in stocks, futures, options, mutual funds, indices, index options, and other types of financial instruments including but not limited to foreign exchange (Forex) and currency trading. Investing and trading has large potential rewards, but also large potential risks. You must be aware of the risks and be willing to accept them in order to invest or trade in any financial markets. Don't trade or invest with money you can't afford to lose. Use risk capital only. Nothing on this website is either a solicitation nor an offer to Buy or Sell stocks, securities, futures, options, indices, mutual funds or any other types of financial instruments. No representations or implications are being made that any account will or is likely to achieve profits or losses similar to those shown. Past performances either actual or hypothetical of any trading system or methodology are not necessarily indicative of future results. The bottom line is that there are no guarantees in trading and investing - it involves financial risk. Leveraged instruments such as futures contracts and selling naked options, and other strategies and financial instruments may involve even a higher degree of financial risk than initially anticipated. Consult with your broker or a professional financial advisor before you invest or trade. Invest and trade at your own risk. You are solely responsible for your investing and trading decisions.

TradingProfiles.com, it's directors, officers, employees, and affiliates are not liable for any financial losses you may incur due to trading or investing in any financial markets or instruments.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. NO FUTURES OR COMMODITY TRADING SYSTEM CAN GUARANTEE PROFITS. THE RISK OF LOSS EXISTS IN FUTURES TRADING.

THE RISK OF FINANCIAL LOSS IS NOT LIMITED TO FUTURES TRADING, BUT ALSO INVOLVES ANY TRADING OR INVESTING IN OTHER FINANCIAL MARKETS SUCH AS STOCKS, STOCK OPTIONS, INDICES, INDEX OPTIONS. KNOW YOUR DEGREE OF RISK BEFORE INVESTING OR TRADING. ULTIMATELY, YOU ARE RESPONSIBLE FOR ANY AND ALL OF YOUR FINANCIAL DECISIONS.

© 2003, 2004, 2005
TradingProfiles.com

Trading Tools, Education, Information and Resources for Stock Trading,
Commodity and Futures Trading, Mutual Funds, Options Trading and Forex Trading