Three Golden Trading Rules That Could Save You Thousands

by General Trading

October, 2016

Note: An update to this article was added to our library in 2019 – check it out here: 5 Trading Rules That Could Save You Thousands (2019 Edition).

Over the 12+ years that I have been trading, I have experienced enough trading trauma to create my own set of trading do’s and don’ts. At the very top of my list are these three very simple rules.

So simple, in fact, that all it takes is three simple slides. Check out the slideshow below:

Rule #1

Do not sell short when the daily chart is in an up-trend; do not initiate long trades when the daily chart is in a down-trend.

Rule #2

Take your favorite oscillator: only initiate long trades when the oscillator is “oversold”, and initiate short trades when it is “overbought”. (Note: this rule does not apply if you’re trading breakouts.)

Rule #3

This rule is actually optional, but strongly suggested: initiate all new long trades when you’re at a clear support level; initiate all new short trades when you’re at a clear resistance level.

Rule number 3 combined with rule number 2 can severely limit your trading opportunities, but it also increases your win rate. By respecting these rules, you can make a lot of other mistakes — even making common position sizing mistakes — and still survive. Every time I have violated them, I have killed My P&L. So let my hard-won experience save you from some heart-burn — tape these rules to your monitor and check them before starting any new trade!

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