This is shared by a Japanese trader, named Kei. Kei is a personal trader and also a mentor in Japan.

He started trading in 2013 and still finds it as enjoyable as it was in the beginning. He can not only make money but also can understand people's psychology, look back on his own mindset to continue to grow, and know other important factors in life in general.

Trader Kei's trading results from 2013-2019 are as follows

Sticking to your own trading rules is one of the endless challenges for all traders.

And this article is for those who tend to break their own rules and lose money from time to time.

Like any other day, markets also go up and down, like gold or USDJPY on 13/08/2019, you know, they went up more than 100 pips.

Looking at Facebook and Twitter at the time, and it occurred to you that was one of those traders who lost $10 million because of it, but if you make your own rules and stick to them, that loss would have been kept to a minimum in such a volatile situation.

So how can you stay true to your principles as a successful trader?

What are trade rules really for?

Assuming you have been looking at the chart since morning and based on your trading rules, there is a moment to enter. And let's say you place a buy order after 3 hours of sitting in front of the screen and set a stop loss based on your trading rules. You feel like "I'm finally in the market", don't you?

And you hold that position for 5 minutes, 10 minutes... and after another 30 minutes... the price starts to reverse.

When you look at reality, there are 2 thoughts in your head that are fighting:
  • One is: "Okay, I'll stop loss here based on my trading rules."
  • But the other thought tells you: "I'm going to move my stop loss down a little bit so it doesn't get a stop loss. And then the price might go up."
After a while, the price moves close to the stop loss, and you decide to move it further, or you simply remove the stop loss.

What can you do then? You are currently losing money and you have canceled your stop-loss order.

Do you pray while trading?

Then all you can do is pray. Pray that the price will go up and hopefully you will eventually make a profit.

Or another scenario could be, as soon as the price hits the stop loss and you have a loss, you simply go ahead and place another buy or sell order to cover the loss.

And in fact, that's what you do when you first start trading. But if you continue to do this, your capital will surely decrease over time.

No matter what happens, just follow the trading rules

This is just an example to tell you first is, if you have placed a stop-loss order or when the price reaches the point where you decide to stop loss, you have to do it no matter what.

And to be able to be disciplined, and this is really what you do. You find a piece of paper and write on it "Will cut your losses according to your own trading rules no matter what" and put it in front of the screen, then read it every now and then before you open the chart.

It is very effective and you can try.

Why do traders not want to stop loss?

You know, the reason why traders don't want to stop loss is basically that they have the mindset that a position should be closed with a profit, and losing money is painful.

However, don't think that a single transaction owns your entire performance.

Your performance should be tested and calculated over time. If you are using MT4 or MT5, you can get your overall performance from the system, or you can record your performance manually in Excel or paper format and do it in 1 month so that you are not happy or sad with just a single trading.

So, the point is, you need to keep thinking "What do you do when you break the trading rules?". And once you decide what to do, you do it no matter what.

Another example

One of the things when breaking one's own trading rules, deciding to do 10 push-ups by the number of pips lost.

So, for example, losing 10 pips, ban will have to do 100 push-ups. You know, it sounds silly, but it works out in the end.

Maintain your trading rules based on Prospect Theory

And this works because in Psychology there is a theory called "Prospect Theory".

Basically, it tells you everyone doesn't like pain. Psychologically, people tend to avoid pain. So by setting another rule that you think is annoying to you, every time you break the trading rules, you will be able to get the mentality to stick to the rules over time.

Of course, everyone is different, and don't want you to go to extremes and end up quitting trading because it's too painful, but that depends on your preferences.

So, anyway, try setting another rule in case you break your own trading rules and see if you can stick to it.

The most important thing for a successful trader is discipline and self-control.

If breaking the rules becomes your habit, no matter how much capital you have, a single trade will blow up your account.

For example, even if you have $10 million, if you trade in a gambling manner, then even with 1% risk, you still cannot be considered a true trader. That's not trading.

Rules are rules, you know, and no matter how big or small the rule is, you still need to respect it no matter what, because if you don't stick to even a small rule, let alone say What a big rule? And even if you make big profits in a few trades by breaking the rules, you will inevitably lose in the long run.

Today sharing may sound a bit serious, but all this because it's really for you, because having violated your own trading rules many times and suffered losses from time to time, and thought to give up trading.