Five Rules to Take Your Trading to the Next Level by Greg Guenthner - We are more interested in making money than being right

1. Be Disciplined
“Our mandate is to follow our models, forcing us to be disciplined,” Davis says. “Our benchmark or anchor composite model determines core invested position.”
Amen brother.

Here’s a common scenario. You make four trades. Three of them are winners, and you book $250 each for a total of $750. But you broke your rules on your fourth trade. And you ended up losing big. It cost you $1,000. Despite the fact that you profited from 3 out of your 4 trades you ended up booking total losses of $250.

3. Remain Flexible
Markets change. The Fed changes interest rates. Disruptive technologies get introduced. A bad drought drives up the price of grain…who knows? And what worked last year might not work today. If you notice your trading system isn’t producing as many winners as it used to, maybe it’s time to check market conditions and possibly revisit your strategies…

4. Money Management Rules
“We are more interested in making money than being right.”
“Be humble and flexible.”

5. Those Who Do Not Study History Are Condemned to Repeat Its Mistakes
What else needs to be said? Study bull markets. Study bear markets. It’s no coincidence many of these longer-term trends play out in similar fashion. It’s never exactly the same but as Mark Twain said, even if history doesn’t repeat itself, it does rhyme.

OK, there you have it – five trading rules to live by.
Own them.