Rules

Rules are incredibly important for trading. They are also very important for living a happy, productive life and lifestyle. You need discipline, order, and structure. You need to commit to a routine and process for how you conduct yourself in trading, in relationships, professionally, and in life.

Today, I did not commit to my rules. I got very tilted. I was very chaotic, emotional, and all over the place. In order to commit to my rules more fully, I will be posting my rules here in addition to when writing posts on psychology, continuing to talk about said rules and whether or not I’m committing to them.

Rule 1:

I do not trade the opening range, Overnight, or premarket. Why do I not do this? To me trading overnight and premarket, there’s just way too many fakeouts. There’s rarely any truly directional moves and the volatility usually is not there compared to RTH. As far as the opening range, there’s just way too much volatility from overnight orders and often times I find the better setups occur after 10 and before 12. making myself available for real tangible trading for just 2.25 hours seems like a great use of my mental capital and puts me in a position to take advantage of the more high probability setups that occur.

Rule 2: I scale into trades always. Hitting market with 5-10 mnq never works out. With the volatility of NQ, just hitting the bid is stupid. This often leads to tilt and revenge trading and overtrading. Trading small with a wider stop and letting the trade work until you’re wrong takes the emotion out of trading. It allows me to trade large when I’m right and to be out quick when I’m wrong.

Rule 3: I trade max 5 mnq/mes. Trading NQ on prop is just straight gambling even if it’s scalping. Trading NQ always leads to blown accounts and challenges.

Rule 4: I stop trading at the very latest 12 pm. Rarely are there any true opportunities after 12 pm. This also protects me from overtrading and getting pissed off that I continue trading despite already having a profitable day.

One rule that I may implement is a max profit limit on prop. The idea that with an XFA, I can just oversize and make a whole bunch of money will always be there, but honestly if I do 1500 in an xfa that’s almost like putting on a great trade and putting on a profit target stop. Why have a profit target stop? Because prices don’t go up or down forever and while an absolute banger of a day would be great, having a daily profit target may be reasonable in prop because that just says that you had a great trading day and in order to protect yourself from losing profits based off emotions, then a daily profit target may be suitable.

These are not all my rules and in the near future, I’ll certainly be writing more and more on psychology, discipline, and mentality as it relates to trading, business, and entrepreneurship.

Thank you!