Lessons from the Pros


Trading Rules Lead to Consistency

Greetings from Chicago! I’m here this week teaching a great group of students how to navigate the financial markets using Online Trading Academy’s patented core strategy. As I’ve written in previous articles, I believe that successful market speculation requires a sound proven process, the discipline to follow it and, lastly, the mindset to stay focused. The challenge most traders encounter is that they don’t have a proven methodology with clear, concise and consistent trading rules to follow. Moreover, many novice traders are only interested in “making money” with little regard to putting forth a process that will produce consistent results. In other words, in trading, most people are only interested in the end result but have little idea how to get there. Does that make any sense?

Free Trading WorkshopLet me draw an analogy. I want to take you to an Automobile manufacturing plant in Detroit Michigan. This plant is where cars are put together in an assembly line. At the start of this assembly line is the bare frame of the car. As it moves down the assembling line, more and more components are added until you end up with a beautiful, high quality American made automobile at the end. Do you think the plant manager comes in every day focused on the end product? Or, is his job to make sure each station on the assembly line runs smoothly? Of course we know the answer. He knows if the assembly line breaks down there will be no end product, or the end product will be faulty.

If this makes sense to you, why do you think it would be any different in trading? As I have stated many times before, trading is not any different than any other risk-taking endeavor.  A clear concise set of trading rules adds clarity and resolves many of the conflicts encountered in trading.Tweet: A concise set of trading rules adds clarity and resolves conflicts. https://ctt.ec/sEbfM+ These rules should be based on producing low-risk high probability outcomes.

Last Monday I was conducting one of our weekly Core Strategy Review sessions. These webinars are designed to help our students hone their skill in Online Trading Academy’s process of finding supply and demand levels. In it I gave a setup in the British pound futures that was a high quality shorting opportunity (seen in the chart highlighted in yellow). This setup was based on a set of clear, concise trading rules that we teach students. These are meant to be done consistently so that the probabilities work in the traders favor. This is what I call the triple C of strategy building.

How to define and follow profitable trading rules

Having a clear, concise set of trading rules that you follow consistently is key to profitable trading.

As we can see in the second chart, the trade worked very well as the news out of Britain pushed the price of the British Pound strongly into a zone where supply exceeded demand. A stop was placed slightly above the higher line in case the trade didn’t work. Not all of them do.  As I mentioned earlier, a trader must come to every trading day equipped with a strong set of rules so they know exactly what to do to take advantage of the opportunities that may be presented.  The lesson for traders here is that all of the energy expended in a trading day should be towards following a clear, concise set of trading rules consistently, with less emphasis placed on the end result. Similar to the auto plant manager in the earlier analogy, if a trader does this the end result should be less losses and more profits. And who doesn’t want that?

Until next time, I hope everyone has a great week.

DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.