Professional Trader Trading Rules

Day trader vs professional trader.

Rules are what separate a day trader from a professional trader. The only good time to break a rule is never. Barriers are made to be broken not rules, you can have one or the other not both.

The most important rule.

A trader must create their own rules. They know themselves the best. The rule that cannot ever be broken is losing more than limit down ie. Once you have lost X amount on a particular day no further trade to be taken.


Breaking Rule, What it tells about trader?

Breaking the limit down rule reveals everything. It reveals you cannot accept loss, can’t see the big picture, do not understand the economics of trading, and do not believe you will be better tomorrow. There is nothing wrong with losing. A loss happens, two days or a week of losses should not happen in one day.


When professional traders break a rule.

“NEVER”. Breaking a rule reveals a bigger, more costly problem. Adjusting a rule mid trade is breaking a rule. If you feel as if your rules are not serving a purpose, change them for tomorrow. Rules are not made to be broken they are made to be adjusted as new information accrues.


The Real test of trader

Most traders can withstand a bad day; it is the second day that can ruin a trading career. After the first loss there is a tendency to be money blind. Who cares if I losing x amount, I loss x amount yesterday? That is an emotional thought. Remember the loss was more than they wanted to lose yesterday. As the losses on the second day your focus drifts. The focus drifts to a result and not the process. As the losses begin mount, reality sets in. Now the mind shifts from short term to long term. They start doing calendar math. Ok it is going to take me a week to make this back. Or I can make all back today. That is like saying I broke my leg, but I can still run as fast as ever. Maybe, but not likely.

How to avoid this scenario.

Easy, don’t break your limit down rule. If you feel like adjusting your limit down during the day; two things will happen. You will lose more or even worse you will make the money back. If you make the money back you will get what you perceive as a positive result. Hey rookie, that is borrowed money. Sacrificing short term gain for long term survival.

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