There are mistakes novice traders make when starting out in the business. They tend to follow too many indicators, too many sure-fire advisors and they tend to overcomplicate their lives with technology that goes far beyond their immediate needs. It matters not if one is using the best stock trading platform available if one is not a disciplined trader. Disciplined trading is a learned skill honed over time in the business. Granted some people have an inherent ability to trade from the start of their careers, but for the majority of the survivors, the skill set is learned by feeling the pain of being undisciplined. As Will Rodgers said, “Good judgment comes from experience, and a lot of that comes from bad judgment.” In that regard, one can free themselves of a lot of the downside of trading experience and bad judgment by following those who have made a living in the business and have risen to prominence. A list of do’s and don’ts and rules to live by is a good start to developing one’s skills. Here is a list of 22 rules by Dennis Gartman that he developed through his life in the trading markets. It is a good read and makes for some considered thought in developing one’s own rules for trading. Rules based trading can take a lot of the heartache and headache out of one’s market operations as a beginner. It frees the trader of the sins of ego, fear, and greed. In short, it can alleviate a lot of the capital loss new traders’ experience. Some years back in the 1980s commodity traders Richard Dennis and William Eckhardt developed a rules based trading system for the commodity markets that brought them great success. They then decided that it could be taught to inexperienced individuals that had no history in the trading markets. The two partners then set about hiring these test subjects, all of differing backgrounds. Their new employees were nicknamed the “turtles”. Some of the new traders washed out of the experiment, but others went on to thrive and to develop their own successful systems. It was proof of concept and a study in the discipline required for rules based trading. Discipline is all-encompassing and a lot more than entering and exiting trades on a systematic basis, it is a lifestyle. Discipline begins with a routine preparation for trading which entails a series of tasks ahead of the opening of trading and continues after trading stops with post-market analysis. From there it extends into the trader's personal habits. A full night’s rest, a healthy diet, limited alcohol use, and a focus on one’s family or other substantive life-affirming activities. Wall Street is full of stories of historic financial blowups by highly successful traders that lost their edge due to the excesses in their personal behavior. Trading is a highly energizing and fun profession, but it takes commitment to discipline and a willingness to develop one’s personal character along with one’s trading systems and technique.
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