Be dispassionate about money. Trade with the money you do not need
Simply put, rationality is way more important than emotions when you are gambling high stakes. When you trade with the money you need — like it is set aside for a house, or a car, or a wedding, you will get emotional about losing it. It will mean something to you. And that will lead to bad decisions. So, trade with money you can afford to lose and perfectly feel nothing about losing
Invest in learning
Most traders do not realize that you have to learn tonnes to be good at this market. If you do not keep learning and improving you are playing the same game every day. So do a post-trade analysis every day. Write down why you did well or did badly. Learn the good stuff to replicate, learn from the bad stuff to avoid. Keep a journal
If you blow up your capital in a few bad trades, you will be left with nothing to trade. In fact, avoiding the bog bad mistakes is way more important than getting a few trades right. As Warren Buffet said, rule No: 1 — Do not lose money!
Manage your trading capital well
In other words, bet size correctly. Do not bet too hard or too soft. Make the bet size a function of your conviction. When you are very sure, be all aggressive. When you are not, say 50–50, try to stay away. When it is 70–30, play accordingly.
Be disciplined
The most important thing in trading. And remember, being disciplined 95% of the time is not being disciplined.
You do not cross a river because it is 4 feet deep on an average, right? :)
Never trade in an emotionally unstable place
This relates to point number 1. Trading and emotions never go hand in hand.
Know that there is always the next trade
Trading is a process. Even if you take only one trade a day, every trade you take is one trade among tens of trades you will take in a month among 200 odd months of your trading life.
It is just one trade. Don’t be attached to it. Don’t get married to it. It is okay to miss it. It is okay to pass it.
More importantly, when something goes wrong in a trade, get out of it. Why? Because there is always the next trade.
Plan the parts of a Trade well
Write down everything. Entry, Exit, Stoploss, Size, Instrument to trade with, contingency plan, etc. Do not just make it a buy or sell decision, based on what you feel that morning.
Always stop loss. Never hang on to losing trades. And keep a stop loss in your system — not in your mind.
Manage yourself while being in a trade
This is fairly simple. Just keep calm and composed, stick to your plan, and do not keep looking at the floating P and L numbers on your screen.
