50 Trading Rules (Including Buy the Rumour Sell the Fact)

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Trading is not complicated. If you see an event, you bet that the market is going to go up or down in reaction to it. However, there are some fundamental rules that you should consider when trading at all times. Some rules are serious, some are satire, many are contradictory, but these do’s, don’ts and remembers will all play a part in the rich tapestry of trading.

50 rules for successful trading

  1. Run your wins – if a trade is going the right way let it ride and don’t take profits too early (use a trailing stop)
  2. Cut your losses – fundamental to risk management, if you’ve got it wrong close off a position before it gets worse
  3. Those who can, trade, those who can’t, teach – with a few exceptions, the majority of trading educators are snake-oil salesmen. Successful traders will be trading, not flogging trading signals on social media
  4. Only ever trade with an FCA regulated broker – don’t muck about with unregulated offshore brokers as you will get ripped off
  5. Always protect your downside – if your broker offers guaranteed stops, use them, cough cough, CHF peg
  6. Keep an open mind – there is opportunity everywhere
  7. Never risk more than you can afford to lose – trading is high risk and not for everyone. Unless you are hedging or an institutional trader, trading is for the “fun money” part of your portfolio.
  8. The easiest way to make a small fortune trading – is to start with a large one
  9. Don’t Rio Trade – A Rio Trade is where you bet everything and more on a single trading idea. If it goes right you make a fortune, if it goes wrong you’re on the first plane to Rio de Janeiro to hide out from your creditors and everyone one you’ve lost money for
  10. Don’t think you understand everything – you don’t, no-one does
  11. Don’t cheat – everything is auditable and written down and it will catch up with you eventually
  12. Stick to what you know – you can’t be an expert at everything
  13. Know when to stop – trading is a learning curve, but also, some people just don’t have the mentality or money for it.
  14. Wear something red – could be socks, suspenders or a bowtie, or all three like Justin Urquart Stewart
  15. Have at least four screens – no, you cannot trade on a beach from a laptop anywhere in the world. Screens are not just for show – it helps with painstaking research, analysis, admin, visualising the market, news fees and order execution
  16. Don’t post a picture of yourself driving a flash car on social media – you’ll look like a scammer even if you are legit
  17. Have a decent broker – decent execution and experienced brokers can fix costly errors quickly
  18. Understand that your broker is not your friend – all they want from you is commission
  19. Be on friendly terms with your broker – but most are just getting on and doing a job they love
  20. Buy your broker a beer – a libatious broker is a loose-lipped broker and will probably have a lot of extremely funny stories to tell
  21. The early bird catches the worm – the most important time of the day is the pre-market news and info gathering stage
  22. Talk the talk – trading is full of phrases, both banter and technical – knowing the shortcode will help a lot
  23. Walk the walk – put your money where your mouth is
  24. Don’t talk your own book – nothing is as transparent or as dull as a trader bragging about their wins or trying to convince others they are right
  25. Don’t gamble – if you just roll the dice on trades the inevitable will happen
  26. Don’t listen to the crowd – if everyone is doing it, it’s probably too late
  27. The trend is your friend – in direct contradiction, some times it pays to ride the trend a little longer
  28. Feed the ducks when they are quacking – if people start clammering for what you’ve got, you may well want to be rid of it before the bubble bursts
  29. Buy when the cannon roars – war isn’t necessarily bad for the stock market
  30. Don’t be a pr!*k for a tick – don’t try and hold a position in the hope it will go up a tiny bit more. Taking profits a few ticks away from your limit is fine
  31. Get size or get lost – if you’re a small trader don’t be a constant pain to your brokers
  32. Remember he who finesses wears pink dresses – bit old fashioned now as there is nothing wrong with wearing a pink dress even if you are a man, but essentially, just get on with it
  33. Beware the phrase “choppy markets” – if your broker says this during volatile markets it basically means that no-one has a clue what the market is doing
  34. Don’t trade if you can drive a bus through the spread – when you are trading and there is little liquidity in the markets the bid/offer will be wide meaning there is little chance you can get in and out of a position scalping
  35. If you pick bottoms you’ll get smell fingers – if you are constantly trying to time the bottom of the market it will backfire. If you’re a buyer, buy.
  36. Don’t try to catch a falling knife – if the market is crashing don’t buy into it
  37. The first cut is the cheapest – if you close losing positions as early as possible you will save yourself a fortune
  38. Buy the rumour, sell the fact – price moves are almost always exaggerated
  39. Don’t be too long and wrong – when you’ve bought into a position and have quickly seen it drop
  40. Worry if your broker says “Mine” – this means you’ve sold something you shouldn’t have
  41. Worry if your broker says “Yours” – this means you’ve bought something your broker doesn’t want
  42. Worry if you hear “Filled” – this may mean you’ve said something by accident and resulted in you having bought or sold something when you didn’t mean to
  43. Avoid markets that are thinner than a witches t*t – when there is not much liquidity on the order book, placing large orders will be problematic
  44. Don’t trade markets that are up and down more than a wh&r*s draws – when the market yo-yos up and down in periods of short term volatility
  45. Mind yer eyes – if you’re a new trader watch our for sharks wanting to “take your eyes out”  by giving you a bad price
  46. Don’t be a sweat trolley – a phrase used when a novice trader places daft trades giving the bigger boys “treats”
  47. Careful buying if there are more shorts than a wham concert – suggesting that the market is oversold with short-sellers and may be due to a bounce
  48. Don’t get a bear squeeze – don’t be short the market when it is forced back up by short-sellers buying back their positions.
  49. Stops are for busses – not always the case, but sometimes
  50. Remember prices aren’t door numbers – a warning to not dilly dally when executing a trade as the price may move and you will miss it.

Thanks to Darren, Paul, Freddie, Jason, and all the characters I’ve worked with over the years for help compiling this list.

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