A few Trading rules, which if followed will help you, trade successfully.
Most traders are aware of these rules but never seem to follow them. These rules
have been mainly taken from Gann rules, formulated by W.D.Gann (1875- 1955) a successful
trader whose trading rules are considered the gospel truth for a trader.
I. Capital Management.
Never lose more than 10% of your capital in a single trade, so that if you lose,
you still have 90% of your capital left to trade better the next time, and your
capital will never be wiped out completely.
II. Stop Loss
Never make a trade without putting a stop loss at the time of initiating the trade
and never shift or cancel it.
III. Booking Profit
Never allow a profit position to run into a loss. Also don't be in a hurry to book
profit, but protect your profits with trailing stop loss i.e., progressively increasing
the stop loss level as the price increases
IV. Averaging
Never average when in loss but only when in profit. Averaging in profit (pyramiding)
gives you maximum profit without risk. premium paid.
V. Overnight Position
N ever sell what shows profit and keep what shows loss. If you want to keep overnight
position square off loss making ones and keep the profit making ones.
rev1.1 (updated on 10-12-10)