25 Rules Of Trading

25 Rules Of Trading - 25-POINT THE discipline for The...

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THE 25-POINT MANTRA The success that a trader achieves in the markets is directly correlated to one’s trading discipline or lack thereof. Trading discipline is 90 percent of the game. The formula is very simple:Trade with discipline and you will succeed;trade without discipline and you will fail. I have been a trader and member of the Chicago Board of Trade (CBOT) for 20 years. During my successful pit-trading career as a scalper, I traded in three different contract markets: 30-Year Treasury bonds at the CBOT, the S&P 500 at the Chicago Mercantile Exchange (CME) and the Gilts at the London International Financial Futures Exchange (LIFFE). Currently, I also trade the electronic $5 Dow futures contract on the CBOT as time permits. Although my formal academic education consists of a bachelor’s degree in business administration from the University of Denver, I never considered myself to be an extremely gifted student. I have no formal training in market technical analysis. I’m unable to even set up a Fibonacci study or Moving Average study on a charting pack- age,let alone know how to trade with such data.I have no formal training in market fun- damental analysis. I don’t understand the economic causal relationship between the actions of the Federal Open Market Committee and Treasury bond prices or equity prices. How, then, have I been able to succeed, day after day, trading the markets for more than 20 years? The answer is simple: I trade with discipline, and I respect the market. When I’m wrong I get out immediately, and when I’m right, I don’t get too greedy. I’m content with small winners and I’m accepting of small losers. Just as I now mentor my trading clients regarding performance, discipline and profit/loss management, I was mentored by one of the best traders ever to set foot on the CBOT trading floor, David Goldberg. David was a long-time spread scalper in the wheat pit and a principal of Goldberg Bros., at the time one of the largest clearing firms at the CBOT, CME and Chicago Board Options Exchange (CBOE). David taught me the rules of trading discipline. I listened to his guidance and gradually, over time, became more and more successful.The student has now become the teacher. discipline for Provided by permission of SFO Magazine February 2003. ' 2003 Wasendorf & Associates, Inc. ± 3812 Cedar Heights Drive ± Cedar Falls, IA 50613
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day trading By Douglas E. Zalesky Precise Trading Feature Provided by permission of SFO Magazine February 2003. ' 2003 Wasendorf & Associates, Inc. ± 3812 Cedar Heights Drive ± Cedar Falls, IA 50613
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We have all violated this rule. However, it should be our goal to try harder not to violate it in the future. What we are really talking about here is the greed factor. The market has rewarded you by moving in the direction of your posi- tion, however, you are not satisfied with a small winner. Thus you hold onto the trade in the hopes of a larger gain, only to watch the market turn and move against you. Of course, inevitably you now hesitate and the trade further deteriorates into a substantial loss.
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This note was uploaded on 10/20/2010 for the course BUSINESS 19450 taught by Professor Goldberg during the Fall '10 term at Saddleback.

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25 Rules Of Trading - 25-POINT THE discipline for The...

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