Some simple rules.

Hi all,

As I am sitting here doing nothing....I began to think why that is. (I am sure my wife could probably give you a few answers....)

I am not trading this week so far, mainly because it would violate my rules in a few ways. And thus, this post will be about some rules of mine that you might consider as well.

#1 - No news trading.

If you haven't been trading very long, I am certain someone somewhere has told you about riches waiting to be picked out of the market by Non-Farm Payroll announcements. Or maybe on CPI? PPI? ABC? or even DEF? (Ok, so the last two I made up.)

I am going to spare you the usual babbling about "liquidity issues", etc. on this one. The truth is, it's unstable trading at best. Yes, you can make $1,000 in a matter of seconds. You can lose it as well. Never forget that. (And for liquidity issues, Who in the hell cares why it's dangerous....just know it is.) You also have to be able to convince yourself that your information, machine, trading experience, and general reaction is going to be faster than firms out there that invest millions into trading. That last statement really puts it into perspective.

The king of all reasons is interest rate announcements. The Bank of England, The EU, and bank of Korea, and Japan (last night) are all announcing this week. Sounds like a mine field.

Trading news related items are all about anticipating. Anticipating is about predicting the future. Predicting the future is about GUESSING.

#2 - Have a life. "Trade to live", not "Live to trade".

In my last post, I mentioned that someone is asking about having me trade an account for them. This rule is the hardest to explain to people. Burnout isn't going to make anyone rich. Sometimes, you have to take a break. I have found that I run in cycles, about every 6-8 weeks I need to give trading a rest for a few days. (Normally 3-5 trading days.) I cannot tell you exactly why that is, but it just seems to be my "comfort zone". And that is all that matters.

Could I trade now? Of course I could. I could have shorted that pinbar on the daily GBP/USD chart. But I just didn't feel the need to. It's a hard thing to explain, once the challenge has been taken out of the equation, some of the "mystique" goes as well. I no longer worry about if I will "make it trading". I know I will. Somehow that takes the fun out of it a little.

I am sure my potential client will read this, so it will come as no surprise when I say this. He and I have gone through this, and I believe he's alright with it. Truthfully, I don't care. He knows this. I have to do what is profitable for me, and him. Burning out is not what's going to work.

Besides....who's mad about that 8.12% gain over six weeks? Even if I skip the seventh week, it's still 8.12%. That's better than most, if not all of his accounts at the moment. (He is spread out quite a bit.)

So I am sitting here, waiting to read interest rate announcements.....and still probably won't do anything until Monday. It happens.

NEVER LET ANYONE TELL YOU THAT YOU HAVE TO BE IN THE MARKETS.

Remember that statement. If you don't feel the need to trade for whatever reason, or even if you are just "nervous" about it.....you are going to get shaken out of a trade a little more easier. So why bother? It's all about comfort.

Have a great week guys.