Thread by @EliteOptions2

Trading rules are vital to ensuring a trader stays on the right path toward success.

Here’s everything you need to know to become a consistent trader.

1) Treat trading like a business

- Set realistic goals & expectations
- Respect your cash and account size
- Pay yourself at the end of each week
- The more time you invest in understanding yourself and the market, the higher chance of achieving consistency in trading

2) Never average down on a losing position

- If a trade is going to work, there’s no need to buy more
- Averaging down may work 50% of the time, but one day you may avg down too much and blow your account
- Focus on high-quality trades and following your rules

3) Never have a bias

- Having a bias will hinder your ability to see trades objectively
- Follow price action & never trade counter-trend
- Don’t try to be “right” all the time
- I’d rather be wrong and make 100k by following price action than try to be right and miss a trade

4) Always take profit on the way up

- You don’t need to hit home runs/grand slams to grow your account
- Systematically take profits (30, 50, 75, 100%+) on the way up
- Each partial sell can help remove emotion while reducing risk, which can help you trade objectively

5) Protect your capital/manage risk

- One, two, or three trades should never have the ability to wipe out your account
- Never risk more than 20% of capital in weekly options
- Learn to trade smaller size and you will see how much easier it will be to manage your positions

6) Always stay grounded

- It doesn’t matter if you make $100 or $100,000 in a day, you need to learn how to appreciate your profits regardless of the amount
- Never compare yourself to other traders, you don’t know what they’ve gone through to get to the level they’re at

7) Cash is a position

- Mental & physical capital preservation is key to long term success and consistency
- If you do not see any trades you would take 90% of the time or feel FOMO, stay cash
- If the market is stuck in a range, it’s best to sit/observe & protect your capital

8) Follow your stop loss

- Always follow your stop loss no matter what
- If a trade doesn’t feel right, cut it
- Losses are a part of trading. It’s important to never let one loss affect your mental and capital ability to take the next trade

9) Formulate a plan and follow it

- You MUST have a plan before you enter a trade
- A plan consists of a trigger, target, and stop-loss
- Create a plan, execute your trade, secure the profit or loss, and move on
- Accept all outcomes before you enter a trade

10) Study and learn from your mistakes

- Journal & study your trades every day
- A losing trade is only a loss if you didn’t take the time to learn from it
- The road to consistency always begins with losses/mistakes so don’t be discouraged if you struggle in the beginning