Q: My trading seems to lack structure and discipline. Do you have any recommendations to become more consistent, like a set of trading rules?

A: No matter what type of trading you do (day trading, swing trading or long-term trading), you will need to come up with your own set of trading rules, or guidelines, to give you some structure. These guidelines will help you evaluate your trading performance and avoid making mental mistakes that can be very costly.

All trading plans should be complete and cover every aspect of trading, from entry strategies, to risk and money management, to a proper exit strategy. I will provide you with a set of example trading rules, or guidelines, that you can apply to almost any market.

Example Trading Rules

• I will use a signal to enter the market--whether fundamental, technical, or a combination of both. I won't just take a long shot or trade on a gut feeling.
• I will always use a stop-loss order for risk management. (Suggestion: above or below a support or resistance level.)
• I will analyze the risk-to-reward ratio to look for more favorable trades.
• If my trade becomes profitable, I will move my stop loss to my breakeven point.
• I will not trade on holidays, as the volume is often too slow and gives false signals.
• I will relax when trading, it should be enjoyable.
• I don't have to trade everyday; I will be patient and wait for an opportunity.
• I WILL ALWAYS FOLLOW MY TRADING RULES.

These are guidelines that a trader could follow each and every day until they become automatic. After a bad day of trading, often you can look back and see that you did not follow your rules the way you should have. And after a good day, the opposite is true--you can look at your rules and see that you followed them very well.

I want to emphasize that you should develop your own set of rules. You can certainly use my example as a guide, but the important thing is that you must be comfortable with the rules you come up with. If you are not comfortable, they will be very difficult for you to follow, and the odds of you being successful will likely be low.

Phillip Streible is a Senior Market Strategist at Lind Plus. If you would like more information about this topic or others, you can contact him at 800-803-8037 or via email at pstreible@lind-waldock.com.

You can hear market commentary from Lind-Waldock market strategists through our weekly Lind Plus Markets on the Move webinars, as well as webinars on other topics of interest to traders. These live, interactive webinars are free to attend. Go to www.lind-waldock.com/events to sign up.

Past performance is not necessarily indicative of future trading results. Trading advice is based on information taken from trade and statistical services and other sources which Lind-Waldock believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder.

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