Trading Ground Rules

I've got 10 short-term positions on right now, otherwise known as "swing trades." Five of the ten are winners, five are losers. The average net profit for all ten positions is +28%. In other words, adding up all the wins and losses, my average trade is ahead by 28%. These trades generally last a few days to a few weeks.

Usually, as trades come off, new ones get put on. I can have as many as 20-25 trades on at any one time, or as few as zero. Batting .500 only works when the amount won per trade is higher the amount loss per trade. So when going into a trade, I always look for risk:reward parameters. My potential gain must be 3X my potential loss (based on charting principles) for me to take the trade. This rule applies whether I am trading stocks or options.

These are my Swing trade rules and Swing trades are for all intents and purposes, the only trades I post here. Yes, sometimes a Swing trade turns into a Buy & Hold trade, but almost by definition, only after achieving significant gains. (And sometimes my Day-trades turn into Swing trades, but since I don't post my Day-trades, they aren't going to appear here.)

That, in a nutshell is how this works for me. In your own trading, if you were asked how it works for you, do you have an answer? My guess is that if you are successful in your trading, you do, and if you are not successful in your trading, you don't. If the latter applies, you are only a few basic ground rules, etched in your daily discipline, away from turning things around.

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