by jilm

Created on: June 10, 2009   Last Updated: June 13, 2009

A suitable answer to such a question may be to know how NOT to be a successful, profitable trader. Here is the short list I have come up with:

Rule #1: DO use your entire bankroll on every single trade. Let's face it, the smaller your trade size the more you lose when you win, right?

Rule #2: DO use the maximum amount of margin available to you. This works in conjunction with rule #1. After all what good is the money if its just laying there doing nothing?

Rule #3: DO NOT use stop losses on any trade. The market makers will just see your stop and trade down to it

Rule #4: DO panic into and out of trades. By this I mean when you hear some guy on TV, read something on an Internet message board or see a share gap up 10% on news then get in right away! (Don't forget rule #1). Conversely after you're in the trade and the market makes 1 tick against your position then GET OUT IMMEDIATELY and reverse your position. Repeat as many times as your account balance will allow.

Rule #5: DO NOT have a pre-defined plan for entering and exiting trades. Having one would violate Rule #4. Instead buy a 'black box' software program that will give trade signals automatically. Ideally you should alternate your trade entries and exits based on the software program and your gut feeling. Note: if the software program does not cost at least $1000 it is garbage.

Rule #6: DO NOT familiarize yourself with any other market. If you're trading stocks then learning about interest rates, commodities, currencies, and bonds will take up valuable time you could use to be trading.

Rule #7: DO try win every trade. No matter how much the market has gone against your position- its only a paper loss as long as you stay in the trade.

Rule #8: DO NOT add to winning positions. This rule applies in case you have made any recent deposits to your account since according to rule #1 you should already be 100% invested in the winning trade.

Rule #9: DO add to losing positions. This rule also applies in case you have made any recent deposits to your account and works in conjunction with rule #7. When you average down a trade it will only have to turn around a little bit to be a winner!

Rule #10: DO get a charting program. Preferably one that will show real-time tick charts or 1 min. bars so you can see what the market is doing by the second. Also be sure to watch it every minute of the day so you don't miss anything. Having this will aid you with rule #4.

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