3 Rules

These are my trading rules that I have imposed on myself to follow no matter what.

  1. Risk Management. Total risked amount should not be beyond 1% of account balance at any time.
  2. Discipline. Only enter at a price level defined by the 4 fundamental entry signs.
  3. Improve. Investigate any trade that exhibits performance statistics beyond the middle 75% quartile, good or bad.

I am deliberately keeping my rules concise and short so that they are easy to follow. This list is always a work in progress. It is meant to serve as a final self-check before I make that final click to send the trade order.

Do feel free to use these rules as a template for your own trading but don’t just use it as is. We each have our own agendas and trading habits. What works for me is not going to work for you simply because we are different. To help you (and to remind myself) better understand how I came about these 3 rules, see my post on How to Draft Your 3 Rules of Trading.

3 Additional Rules for Emergency

In the event of a 3% account drawdown or more, these 3 rules are to be added until my account is recovered to a breakeven point.

  1. Risk Management. Reduce risk by limiting to trading half the position size and half the overall risk exposure.
  2. Discipline. Recall my best trading signals and only trade those, ignoring other setups.
  3. Improve. Analyse what I did wrong and stop doing that.

Archive of Old Rules

version 2.0

  1. Discipline. Never try to catch the first top/bottom as viewed in the trade order timeframe.
  2. Risk Management. Any open position must have an up-to-date stop in place.
  3. Improve. Investigate any trade that exhibits performance statistics beyond the middle 50% quartile, good or bad.