Top Trading Rules You Must Follow While Trading

Trading Rules play a major role in defining the profitability of the trader. After mentoring a lot of students and working with many traders, I found that when amateurs come to the market, they have completely different thought processes than professional traders. That is the reason why most of the new traders start by losing money.

Today’s article is divided into 3 parts where I will explain to you the set of rules you should follow before, during, and after trading to trade effectively in the market. So, let’s start with the rules you must follow before trading

• Trading Rules you should follow before entering into the trade.

Rule 1 – Calculate the potential loss and position size accordingly.

You should write your targets with a pencil in trading, but you should write your stop loss with a permanent marker. The only way to make big money out of trading is not to lose big money. If you are not losing big, you will eventually make a lot of money through trading.

So, always calculate your loss before entering into the trade and take your position accordingly. So that, in case your stop-loss gets hit, you will be comfortable with that loss.

Rule 2 – Accept the loss in your mind first.

Once you calculate the potential loss, you need to accept it in your mind first. Calculate your loss first and always assume that whenever you enter a trade, you will lose that much money. It gives you psychological comfort while trading.

If you are not accepting the loss in your mind, you will always expect profit from every trade, and whenever your stop-loss is going to hit, you will get hurt. So, it is always better and expected from every good trader that he should accept the potential loss in his mind before entering into any trade.

Rule 3 – Every trade requires adequate time to play out.

Unless you are not a scalper, it will take time to hit your target. Especially when you are going for big targets with small stop losses, your stop losses are going to hit most of the time. You have to be comfortable with that.

When you are impatient about your trades, it is more likely that you will commit mistakes while trading. Accept that before hitting your target, you are going to take multiple pullbacks, and you have to be ready mentally to take those pullbacks.

• Trading Rules you must follow during the trade.

Rule 1 -Let the market throw you out of the trade.

Let the market take your stop-loss. Whenever you take the trade with a certain analysis, you should stick to it until the end. The reason I am saying this is because when traders enter into the trade, and when a trade goes slightly against them, they cut their position out of fear. Cutting your position out of fear is the worst thing to do in trading.

I have often seen that traders cut their position out of fear, and from that point, trade goes in their direction, and they close their trading day with a slight loss and a lot of frustration instead of handsome profits.

Rule 2 – Doing nothing is a skill!

Most of the time, you have to do nothing in trading. When you enter a trade and when you tell yourself that this is my stop loss and this is my target level, then that’s it! Your job is done; now, the market will do its job.

When you are constantly trying to change your targets or stop losses, you are probably thinking too much about that trade. The key to successful trading is following your system and giving your trades enough time to play out rather than constantly checking and managing your trades.

Rule 3- Journalise Everything.

Right from the start to the end of the trade, try to journalise every thought that came to your mind while trading. This will have an immense impact on your trading over the long run.

Journalising will help you to understand your thought process and how you behaved when you were in a trade. Every trader should compulsorily journal his thoughts in order to improve his trading.

• Trading Rules you must follow after the trade is over.

Rule 1 – Take a short break!

Whenever you are in a trade, your mind and brain work with high intensity, which is why you become exhausted if you are continuously trading for the day.

It is always good to take a short break once you are out of one trade and then look for another opportunity. This short break will allow your mind and body to relax for a while, and then you can come back to find new opportunities with a more focused approach. These are very small and simple hacks, but they will have an immense impact on your trading performance if you follow them religiously.

Rule 2 – Review your trading journal!

A trading journal is your best trading mentor, and hence it is always important to review your trading journal once you are done with trading.

In case you don’t know how to write a trading journal, then I have posted an entire blog explaining how you can write your trading journal. You can click here to check that blog.

When you review your trading journal, you will automatically get to know where you are making a mistake or what needs to be improved in your trading system in order to trade effectively in the market.

Always take daily, weekly, monthly, and yearly reviews of your trading journal. You will be amazed to see the drastic change in your trading performance over a period of time.

So these are the set of rules you should follow before, while, and after trading. I hope that through this article, I was able to contribute to the betterment of your trading. Don’t forget to share us across all your social media handles if you like this article.

If you want to know more about Risk Management & Intraday Trading Strategies you can refer to our previous blog on

Importance Of Risk Management In Trading and 10 Best Intraday Trading Strategies.

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Happy Learning!