Marks Investing Blog

Now that I am back on track and sticking to the rules of the Knowledge to Action strategies I am slowly but surely getting my profitable trades ratio increasing.

Over the period of trading madness where I did everything wrong I learned quite a bit and created these “rules” for myself. I use these rules as well as the rules that Knowledge to Action provides.

The rules below are from my personal slide into trading madness where I lost quite a bit of my capital and erased all my profit to date.

1) Walk away if there are no setups in the market that meet your entry rules. Do not “invent” any setups because you are bored or think you should be trading. These trades are the ones where you can lose a heap (like me).

2) Have a set amount of pips or profit for each trade that when reached you take profit and walk away. Greed is not good! I have been greedy and left a trade running that got up to my “take profit number” and let it run a few more minutes only to see in seconds the profit crawl back to nothing (5 minute charts). I then waited for the trade to come back but it didn’t and kept going against my trade and I ended up losing.

3) Check the news and event calendar first! Yesh… Its amazing the amount of times I placed a trade without looking at the news or the event calendar on ForexFactory.com. Something like NFP can really screwed up any trade you have if you don’t know about it.

4) Don’t jump into a “movement” such as a sudden price increase or decrease. For example if you see the EUR/USD 5 minute chart price dramatically increase or drop don’t add in a trade thinking you are going to catch this wave. 9 times out of 10 by the time you placed your trade the sudden increase or decrease stops and then either slows, corrects or changes trend. Sometimes its stop losses being hit around key support, resistance and round numbers or someone decides to get out of the position they have. I am not sure if I made sense here. Its like surfing – by the time you see a wave coming to you – its peaked or going down. You need to “see” the wave just when it starts or just before to catch the best performance.

5) Don’t “Double Dip”. If you have taken profit from a good trade do not go back in and trade again thinking you are on a roll and the price is still has more grunt. I did this a few times only for the price to reverse – take all my profit I got the first time – and leave me in the negative for the trade!! Why didn’t I kill the dead trade? Well I did the other stupid thing of waiting for the price to reverse and go back to what it was doing – it never does in the time you want it too. Duh!