فوركس ساتو

1 #
BE DISCIPLINED
EVERY DAY, IN EVERY
TRADE, AND THE MARKET
WILL REWARD YOU. BUT
DON’T CLAIM TO BE
DISCIPLINED IF YOU ARE
NOT 100 PERCENT
OF THE TIME.
2 #
ALWAYS
LOWER YOUR
TRADE SIZE
WHEN YOU’RE
TRADING
POORLY.
3 #
NEVER TURN A
WINNER INTO A
LOSER. 4 #
discipline
mechanics
content
Provided by permission of SFO Magazine February 2003. © 2003 Wasendorf & Associates, Inc. • 3812 Cedar Heights Drive • Cedar Falls, IA 50613
When I was a new
and undisciplined
trader, I can’t tell you
how many times that I
prayed to the “Bond god.” My
prayers were a plea to help me out of a less-than-pleasant trade position.
I would pray for some sort of divine intervention that, by the
way, never materialized. I soon realized that praying to the “Bond
god” or any other “futures god” was a wasted exercise. Just get out!
Once you come to the realization
that your trade is no good it’s best
to exit immediately. “It’s never a
loser until you get out” and “Not to
worry, it’ll come back” are often said
tongue in cheek, by traders in the pit. Once the phrase is stated, it is an
affirmation that the trader realizes that the trade is no good, it is not
coming back and it is time to exit.
You are not a “loser” because
you have a losing trade on.
You are, however, a loser if
you do not get out of the losing
trade once you recognize that the trade is no
good. It’s amazing to me how accurate your gut is as a market indicator.
If, in your gut, you have the idea that the trade is no good then it’s
probably no good. Time to exit.
Every trader has losing trades throughout the session. A typical trade
day for me consists of 33 percent losing trades, 33 percent scratches
and 33 percent winners. I exit my losers very quickly. They don’t cost
me much. So, although I have either lost or scratched over two-thirds
of my trades for the day, I still go home a winner.
Too many new traders think that
because they have $25,000
equity in their trading account
that they somehow have the
right to trade five or ten e-Mini S&P
contracts. This cannot be further from the truth. If you can’t trade a
one lot successfully, what makes you
think that you have the right to trade a
10 lot?
I demand that my students show me a
trading profit over the course of ten
consecutive trading days trading a
one lot only. When they have
achieved a profitable ten-day period,
in my eyes, they have earned the right
to trade a two lot for the next ten trading
sessions.
Remember: if you are trading poorly
with two lots you must lower your
trade size down to a one lot.
Never put yourself in the precarious
position of losing
more money than you can
afford. The worst feeling in
the world is wanting to trade
and not being able to do so
because the equity in your account
is too low and your brokerage firm will not allow you to continue
unless you submit more funds.
I require my students to place daily downside limits on their performance.
For example, your daily loss limit can never exceed $500. Once
you reach the $500 loss limit, you must turn your PC off and call it a
day. You can always come back tomorrow.
In all of my years as a trader
I never traded more than a
50 lot on any individual
trade. Sure, I would have
liked to be able to trade like colleagues
in the pit who were regularly trading 100 or 200 lots per trade.
However, I didn’t possess the emotional or psychological skill set necessary
to trade such big size. That’s OK. I knew that my comfort zone
was somewhere between 10 and 20 lots per trade. Typically, if I traded
more than 20 lots, I would “butcher” the trade. Emotionally I could
not handle that size. The trade would inevitably turn into a loser
because I could not trade with the same talent level that I possessed
with a 10 lot.
Learn to accept your comfort zone as it relates to trade size. You are
who you are.
I require my “students” to actually
write down the specific
market prerequisites (setups)
that must take place in
order for them to make a
trade. I don’t necessarily
care what the methodology is,
but I do want them to make sure
that they have a set of rules, market setups
or price action that must appear in order for them to take the trade.
You must have a game plan.
If you have a proven methodology but it doesn’t seem to be working
in a given trading session, don’t go home that night and try to devise
another one. If your methodology works more than one-half of the
trading sessions, then stick with it.
Keep a trade log of all your trades
throughout the session. If, for
example, you know that, so far,
your biggest winner on the day
is five e-Mini S&P points, then do
not allow a losing trade to exceed those
five points. If you do allow a loss to exceed your biggest gain then,
effectively, what you have when you net out the biggest winner and
biggest loss is a net loss on the two trades. Not good.
YOUR BIGGEST
LOSER CAN’T
EXCEED YOUR
BIGGEST
WINNER.
5 #
DEVELOP A
METHODOLOGY
AND STICK WITH IT.
DON’T CHANGE
METHODOLOGIES
FROM DAY
TO DAY.
6 #
BE YOURSELF.
DON’T TRY TO BE
SOMEONE ELSE. 7 #
YOU ALWAYS
WANT TO BE ABLE
TO COME BACK
AND PLAY THE
NEXT DAY.
8 #
EARN THE
RIGHT TO TRADE
BIGGER. 9 #
GET OUT OF
#10 YOUR LOSERS.
#11
DON’T HOPE AND
PRAY. IF YOU DO,
YOU WILL LOSE. #12
If you have a
proven
methodology
but it doesn’t
seem to be
working in a
given trading
session, don’t
go home that
night and try
to devise
another one.
THE FIRST
LOSS IS THE
BEST LOSS.
Precise Trading Feature
Provided by permission of SFO Magazine February 2003. © 2003 Wasendorf & Associates, Inc. • 3812 Cedar Heights Drive • Cedar Falls, IA 50613
I have never understood why
so many electronic traders
listen to or watch CNBC,
MSNBC, Bloomberg News or
FNN all day long. The “talking
heads” on these programs know very little about market dynamics and
market price action. Very few, if any, have ever even traded a one lot
in any pit on any exchange. Yet they claim to be experts on everything.
Before becoming a “trading and markets expert,” the guy on CNBC
reporting hourly from the Bond Pit, was a phone clerk on the trading
floor. Obviously this qualifies him to be an expert! He, and others, can
provide no utility to you. Treat it for what it really is…. entertainment.
The fact is: The reporting that you hear on the business programs is
“old news.” The story has already been dissected and consumed by the
professional market participants long before the “news” has been disseminated.
Do not trade off of the reporting. It’s too late.
In all of the years that
I have been a trader
and associated with
traders, I have never met a
successful speculator. It is impossible to speculate and consistently
print large winners. Don’t be a speculator. Be a trader.
Short-term scalping of the markets is the answer. The probability of a
winning day or week is greatly increased if you trade short term: small
winners and even smaller losses.
This rule is the one that I get
the most questions and feedback
on by traders from all
over the world. Traders ask,
“What do you mean, love to lose money. Are you crazy?”
No, I’m not crazy. What I mean is to accept the fact that you are going
to have losing trades throughout the trading session. Get out of your
losers quickly. Love to get out of your losers quickly. It will save you
a lot of trading capital and will make you a much better trader.
This rule relates to the
theory of capital
flow. It is trading
capital that pushes a
market one way or
another. An oversupply or
imbalance of buy orders will push the
market up. An oversupply of sell orders will push the market lower.
When price stagnation is present (as typically happens many times
throughout the trading session), the market and its participants are
telling us that, at the present time, they are happy or satisfied with the
prevailing bid and offer.
You don’t want to be in the market at these times. The market is not going
anywhere. It is a waste of time, capital and emotional energy. It’s much
better to wait for the market to heat up a little and then place your trade.
Please review rules #5, #8,
#10, #11 and #15. If you
follow any one of these
rules you will never violate
rule #17.
Big losses prevent you from having a winning day. They wipe out too
many small winners that you have worked so hard to achieve. Big
losses also “kill you” from a psychological and emotional standpoint.
It takes a long time to get your confidence back after taking a big loss
on a trade.
When I was a young bond trader,
my goal every day was to
make 10 bond tics. A tic is
$31.25, so if I made 10 tics
on the day, I would be up
$312.50.
It may not sound like a lot of money to you, but it surely was to me.
My mentor, David Goldberg, told me that if I could make 10 bond tics
every trading day of the year, at the end of the year I would be up
$72,500 in my trading account. Not bad for a 23-year old kid in 1982.
It is amazing how quickly your trading account will build up over time
just by making a little bit every day. If you are a new e-Mini S&P trader
try to make just 5 or 6 points per day. If you can do that you’ll have
that $72,000 at the end of the year.
Just as I don’t know of
any successful speculators,
I don’t know of
any trader who goes into a
trade expecting to hit a home run and then actually having it happen.
You should never approach a trade with the idea that it’s going to be a
huge winner. Sometimes they turn out that way, but the times that I have
a hit a home run on a position is most definitely luck, not skill.
My intent on the trade was to produce a small winner but, because I
had the trade on, and at the same time (as luck would have it), the Fed
unexpectedly entered the market, I unwittingly had a huge winner.
This probably has happened to me less than five times in 20 years.
How nice is it to be
able to turn on
your PC in the
morning knowing
that if you play by the
Rules, trade with discipline and stick to your methodology, the probability
of a successful day is high.
I’ve had years where I could count on one hand the number of losing
days that I had. Don’t you think that this consistency allowed me to be
extremely confident? I knew that I was going to make money on any
given day. Why would I think otherwise? Making a little bit everyday
(Rules #18 and #19) will allow you to trade throughout the trading session
with confidence and control.
Remember Rule #9: If you make a little bit every day, then you have
earned the right to trade bigger. Thus, by following the Rules of
Discipline, your “little bit” can soon turn into much more profitable days.
DON’T WORRY
ABOUT NEWS.
#13 IT’S HISTORY.
DON’T SPECULATE.
IF YOU DO,YOU
WILL LOSE. #14
LOVE TO LOSE
#15 MONEY.
IF YOUR TRADE
IS NOT GOING ANYWHERE
IN A GIVEN
TIMEFRAME, IT’S
TIME TO EXIT.
#16
NEVER TAKE
A BIG LOSS. ONLY
A BIG LOSS CAN
HURT YOU.
#17
MAKE A
LITTLE BIT
EVERYDAY. DIG
YOUR DITCHES.
DON’T FILL
THEM IN.
#18
HIT SINGLES
#19 NOT HOME RUNS.
CONSISTENCY
BUILDS CONFIDENCE
AND CONTROL. #20
Provided by permission of SFO Magazine February 2003. © 2003 Wasendorf & Associates, Inc. • 3812 Cedar Heights Drive • Cedar Falls, IA 50613
The net effect of
scaling out of your
winners will be an
increased average
win per trade while keeping
your losses to your pre-defined risk parameters.
You should never scale out of your losers. If your trade size is more than
a one lot and your trade is a loser, you must exit the entire position en
masse. If your trade size is more than a one lot and your trade is a winner,
it is best to exit one-half of your position at your first price target.
If you trade with protective stop-loss orders, you should amend the
order to reflect the change in trade size (remember you have exited onehalf
of your position) and raise or lower the stop price, depending on
whether it’s a long or short position, to your original initiating trade
entry price. You now are essentially “playing with the house’s money.”
You can’t lose on the remaining position, and that’s obviously a fantastic
position in which to put yourself. Place a limit order a few tics above
or below the market, depending on your position, sit back and relax.
A bricklayer shows
up for work
every day of his
working life and
executes with the
same methodology—
brick by brick by brick.
The same consistency applies to traders, as well. Please review Rules
#6 and #20. I have not changed my trading methodology and execution
strategy in 20 years. I guess I’m the bricklayer.
I can’t tell
you how
many times
traders have
come into my
office terribly
depressed because they “knew” the market was going one way or
another; however, they failed to put a position on. When I ask them
why they did not put the trade on, their responses are always the same:
they did not want to chase the market. They were waiting to be filled
at the absolute best possible price (and never got filled), or only two
out of three of their
market indicators were
present and they were
waiting for the third.
The net result of all
this procrastination
and hesitation is the
trader was correct in
deducing market direction
but his profit on
the trade was zero. We
don’t get paid in this business unless we put the trade on. Don’t overanalyze
the trade. Place the trade and then manage it. If you’re wrong,
get out. But you’ll never be right unless you actually make the trade.
We all start out
the day the same.
We all start out at
zero. Once the bell
rings and trading begins,
it’s how we conduct ourselves from a behavioral standpoint that
will dictate whether or not we will make money on the day. If you
follow the 25 Rules, you should do well. If you do not, you will
do poorly.
The market moves
wherever it
wants to go. It
does not care
about you or me. It
does not play favorites. It does
not discriminate. It does not intentionally harm any one individual.
The market is always right.
You must learn to respect the market. The market will mercilessly
punish you if you do not play by the Rules. Learn to condition
yourself to play by the 25 Rules of Trading Discipline and you will
be rewarded.
LEARN TO SWEAT
OUT (SCALE OUT)
#21 YOUR WINNERS.
MAKE THE SAME
TYPE OF TRADES OVER
AND OVER AGAIN –
BE A BRICKLAYER. #22
A bricklayer shows up
for work every day of
his working life and
executes with the
same methodology—
brick by brick by brick.
DON’T OVER-ANALYZE.
DON’T PROCRASTINATE.
DON’T HESITATE. IF YOU
DO,YOU WILL LOSE.
#23
ALL TRADERS ARE
CREATED EQUAL IN
THE EYES OF THE
MARKET.
#24
IT’S THE MARKET
ITSELF THAT WIELDS
THE ULTIMATE SCALE
OF JUSTICE.
#25
Doug Zalesky is CEO of eLocal, L.L.C., www.elocaltrading.
com. ELocal provides physical and electronic execution,
brokerage and clearing services to all major futures
and equities exchanges. They service electronic Internet
traders, floor traders and institutional trading firms. For
additional information on the firm and Doug’s 25 Rules of
Trading Discipline please contact Doug at
doug.zalesky@elocaltrading.com
SFO
I can’t tell you
how many times
traders have
come into my
office terribly
depressed
because they
“knew” the
market was
going one way
or another;
however, they
failed to put a
position on.
Precise Trading Feature
Provided by permission of SFO Magazine February 2003. © 2003 Wasendorf & Associates, Inc. • 3812 Cedar Heights Drive • Cedar Falls, IA 50613