RULE 1:
In a losing game such as trading, assume you are wrong until the market proves you are right. Positions established must be reduced and removed until or unless the market proves the position correct. Why is rule one so hard to implement? The answer is that 98 per cent of all traders trade to be right. The rest trade the markets to make money. The fear of being wrong is more often than not a greater motivator than the fear of losing money. Be conscious of it when you are trading.
RULE 2:
Press your winners without exception. By incorporating rule two in your game plan from the start, you will be eliminating the desire to be proud when the market moves in your direction, and to take profits to show you are right. Traders love to be right. This is your enemy – to love to be right. Your motivation must be to love to do the right thing. When you think you are right in the market, this is just the beginning of your trade – not the time to take your profits to say to the world, ‘See, I was right!’ Who really cares if you were right? You will become the best trader you can be by being wrong small, not right small! Get that in your mind now. You are going to have to press your winners if you really consider yourself to have the ability to make a living or extra income from trading. Otherwise, face the truth that you are only playing to break even. The money will follow the correct action.
