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The Attitude Required to Become a Consistently Profitable Trader:

There’s no doubt that becoming a consistently profitable trader is a difficult task that requires hours of study and practice to achieve. That’s why 90% of traders lose money. Oftentimes, they’re either too lazy or simply don’t want to take time to learn and become proficient at it. In the end, that anti-education attitude leads to mirror-trading (piggybacking on other people’s trades) and failure.

Top 10 List of Trading Rules

The good news is that since the majority of traders aren’t willing to put the effort into becoming great at their craft, there’s a ton of opportunity out there for those willing to do so. It doesn’t take a genius to make money in the market. There’s no Master’s degree or previous job experience required to do it. In fact, almost anyone can start trading if they’re over 18 years old and have $500. 9 times out of 10, the difference between success and failure is attitude.

Protecting Your Capital With Knowledge and Discipline – Here are the Rules:

Having a set of trading rules is critical to success. It provides you with the structure and confidence necessary to zone-in on profitable opportunities and avoid boneheaded mistakes. The ultimate goal is to limit losses and maximize profits, which sounds easy in theory but can actually be quite difficult in practice for both beginners and veterans alike.

In no particular order, here is a list of 10 trading rules I try to stick to on a regular basis:

1.) Plan Every Single Trade Ahead of Time

I know I just mentioned that these are in no particular order, but if there was a #1 trading rule, this would most likely be it. Having a plan enables you to understand why exactly you want to be in the trade and a plan for exiting it, whether it goes up or down. This shouldn’t be understated. Many people don’t account for the possibility that they’ll be wrong and the stock won’t move in their favor. This is a huge mistake. A well-rounded plan covers your potential entry and exit in detail with accompanying reasons why.

2.) Stick to Your Pre-Trade Plan!

What good is a plan if you don’t stick to it? It’s hard to believe, but many traders go through the exercise of creating trade plans only to ignore them once they’re in the trade. This is where discipline separates the good traders from the bad. After all, you made that plan for a reason. If you start questioning your initial trade plan then you need to exit and re-think your position.

3.) Don’t Attempt to Rationalize a Trade After You’re Already in it

Again, this circles back to the necessity of having a plan ahead of time. Too many traders buy a stock for almost no reason at all and then look for justification after the fact. That research should be done before the trade even takes place. In extreme cases, individuals will attempt to rationalize as a trade continues going against them, never willing to admit defeat. This is foolish and costly.

4.) Study and Educate Yourself First Before Risking Your Hard-Earned Money

Too many people are drawn to the stock market for the potential monetary benefits, yet not willing to put in the work necessary to achieve substantial success. There aren’t many barriers to entry in order to start trading stocks – no college degrees or exams necessary. But if you want to find success, you have to be willing to study concepts and then apply them on your own. The good news is that there are services and programs out there to help you.

5.) Never Trade Just For the Thrill of the Action

This is called gambling. Many people confuse trading with gambling and it just doesn’t need to be that way. Sure, you can open up a brokerage account and start throwing money at some penny stock in the hopes that it will become the next Microsoft, but you probably won’t have much success with it. Forcing trades just for the thrill is like buying lotto tickets where the odds are stacked against you. Great traders, however, have strategies and rules that put the odds in their favor over and over again. Don’t just trade for the sake of trading.

6.) Treat Trading Like a Business

Trading needs to be taken seriously. You probably worked hard to fund your brokerage account with thousands of dollars in order to get started and you don’t want to let it all slip away by being careless. You need to be smart about the decisions you make and be able to take calculated risks. Ultimately, you will fail without a plan, commitment, and support. It’s important to know what you’re doing and make trades in a thoughtful, educated way.

7.) Admit Your Mistakes and Learn From Them

This is something new traders seem to struggle with quite a bit. They enter trades and are too proud to sell them for losses. What you need to understand is that losses are an unavoidable aspect of trading, so put your ego aside and cut them fast. No trader has ever had a 100% win rate. Believe it or not, some traders with 40% win rates still make good money by cutting losses fast and nailing their winners. Overall, you need to accept that you’re only human and will make mistakes sometimes. Just make sure that you learn from them.

8.) Create Realistic Goals and Stay Motivated to Achieve Them

Most people who start trading have this vague goal of becoming rich. But what does that really mean to you? It’s extremely relative. Your definition of rich can be completely different from somebody else’s. You also need to understand that those monetary benefits may not come instantly. Sure, it’s great to strive for huge gains, but don’t expect to consistently make thousands of dollars each week with no education, limited experience, and a small portfolio value. Generate realistic goals for yourself and work hard to achieve them.

9.) Don’t Fall in Love With Any Company, Story, or Stock

Many beginners on Wall Street fall into this trap. They buy a stock, become attached to it, and never want to sell. Even if it was originally supposed to be a short-term day or swing trade, they let it turn into a long-term trade because they can’t mentally let it go. This can be similar to rule #3 that covers rationalizing trades after you enter them. That should never happen. If you’re digging deep to support the fact that you’re in a trade when it only continues to go against you, then you’re doing something wrong. Never ignore the price action.

10.) Take it 1 Trade at a Time – Small Profits Add Up

When people get drawn into trading, it’s usually because of the money. They see guys on Twitter bragging about their 200% in 10 minutes, and naturally, they want that for themselves. But shooting for home runs on every trade isn’t necessarily the way to go. It’s very possible to make a market-crushing annual return by stacking up modest 5-10% winners over and over again. Many times, getting greedy and shooting for those 100% winners results in traders giving all of their gains back or even exiting for a loss.

**5 Bonus Trading Rules**

11.) Allocate Properly → No Single Trade Should Make You Rich or Blow Up Your Account

12.) Cut Losses Fast → Don’t Let Small Mistakes Turn Into Major Disasters

13.) Don’t Force Trades → Make Trading Work For Your Schedule

14.) Keep Your Strategy Simple → Don’t Use Hundreds of Indicators

15.) Hope is Not a Strategy → Make Sure You Have a Strong Thesis For Each Position You Take

Conclusion – Following a Set of Trading Rules Provides Structure and Protects Capital:

Too many individuals jump right into trading without the proper knowledge and training necessary to succeed. As a result, they’re bound to make costly mistakes and potentially blow up their accounts. It’s sad because the stock market has so much income-potential, but horrible first-time experiences can end up scaring people away forever.

That’s why the initial educational aspect is so critical. New traders need to build a foundation on various aspects of the market, strategies, and concepts before doing anything else. Understanding how to not lose your money is just as important as how to turn it into more. In the end, a set of trading rules can oftentimes protect you from yourself and keep you cognizant of your faults. Emotions will always slip into the mind of a trader, but having a clear list of rules that you follow can help control those emotions and keep you on the path of consistent profits.

Written by Matt Thomas (@MattThomasTP)

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Matt Thomas

Founder of, Creator of the Trading Success Framework Course & Trading Paradigm Skool Community, and Intraday Futures Trader Using Auction Market Theory & Profiling (Volume & Market Profile).


  • Sujandar Mahesan says:

    I am a person who always keep learning more about trading just to be ahead of everything. This list had everything I needed to know about developing trading rules. I learned that I should have a pre-trade plan and how to execute it well. Thank you so much for sharing this with me.

  • Paul says:

    Good tips Matt.

    The reason that a lot of traders fail isn’t so much that they have bad strategies, it’s because they often don’t stick to them. Trading takes a lot of discipline because you have to remain logical in a highly emotional environment. Thus, having a statistics based strategy and sticking to it through the trade is the way to be consistently profitable.

    I think working with a practice account before starting live is the way to go. Don’t go live until you’re comfortable with your stats. Would you agree?

    • Matt Thomas says:

      Hi Paul – I completely agree with trading using a practice account until you feel comfortable with a particular strategy. Why risk money until you prove to yourself that your approach is profitable? A lot of people argue that the emotional stakes aren’t the same with paper trading (which is true), but I still think that practice phase is critical to success. Jumping into the market too quickly without the proper education and experience is one of the biggest mistakes new traders make. Paper trading with a demo account can help avoid losses during the initial learning phase.

  • Ma'chir Jackson says:

    Hi Matt. Thnx for the great information you have provided. I have always been allured by the stock market. I have tried a few things here and there with no success a large part of it being from not having the proper basis or laid foundation. I See you have taken the time to acquire the knowledge and disseminate it. I have picked up on a few key components that I was once missing from viewing your list.

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