Golden Rules of Trading
Golden Rules of Trading
Dave Vivek
My Risk Mentor Follow
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Traders should take steps, prior to embarking on every trade, to limit the impact that an
unprofitable trade could have on their capital.
Stop losses should always be used and never moved away from the market A stop loss
should always be used and just as importantly should be used correctly. The golden rule of
Stop Losses is that they should never be moved away from the market once the trade is
opened. If a trader feels that their stop loss is incorrectly placed, they are recognising that
the foundations of their trade are incorrect and therefore they should close out. The best
way to place a stop loss is to take the mindset of ‘If this stop loss is touched, I have judged
the market wrongly and I should close out’. Once closed out, the trader can always re-
evaluate the situation and go back into the market if the market conditions are favourable.
Limit exposure
Limiting exposure simply means limit the percentage of your capital that is exposed both to
one sector and to the market as a whole at any one time. This will usually mean limiting
your exposure to approximately 5% of capital. The theory behind this is that, should the
market go against you in all your positions on the same day, you will still be able to trade in
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4/23/24, 4:58 PM Golden rules of trading
This is not the same as averaging in, which involves entering the market slightly early with
half of the position size in order to take ensure that ,should the market bounce prematurely,
the trading opportunity is not lost.
Let profits run and cut losses short Stop losses should never be moved away from the
market. Be disciplined with yourself, when your stop loss level is touched, get out. If a trade
is proving profitable, don’t be afraid to track the market. Theoretically a trade should never
be simply closed out manually; it should always be closed out by a stop loss. This allows
the trader to lock in profit but never prevent further profit from being made.
is wrong that day and that you are not in tune with the markets. Walking away is nothing to
be ashamed of. Come back fresh the next day.
Don’t look too hard for your trades, wait for the good ones to come to
you
There are so many markets to trade that there are endless supplies of really good quality
high probability trades. If you are looking too hard for trades, you will end up moving into
positions which you have falsely convinced yourself are high probability trades. The better
a trade, the more it will jump out of the charts at you.
All information on this website and hosted events are only for educational purposes and are not intended to provide financial advice.
Any statements about profits or income, expressed or implied, do not represent a guarantee. Your actual trading may result in losses as
no trading system is guaranteed. You accept full responsibilities for your own actions, trades, profit or loss, and agree to hold the
EDITORS’ PICKS
Gold price flirts with $2,300 amid receding safe-haven demand, reduced Fed rate cut bets
Gold price (XAU/USD) remains under heavy selling pressure for the second straight day on Tuesday and
languishes near its lowest level in over two weeks, around the $2,300 mark heading into the European
session.
PENDLE price soars 10% after Arthur Hayes’ optimism on Pendle derivative exchange
Pendle is among the top performers in the cryptocurrency market today, posting double-digit gains. Its
peers in the altcoin space are not as forthcoming even as the market enjoys bullish sentiment inspired by
Bitcoin price.
US S&P Global PMIs Preview: Economic expansion set to keep momentum in April
S&P Global Manufacturing PMI and Services PMI are both expected to come in at 52 in April’s flash
estimate, highlighting an ongoing expansion in the private sector’s economic activity.
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