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Jan 27

The Two Trading Rules That Everyone Is Breaking

I read a great post by Stephen Burns (@SJosephBurns) That outlined the 7 Habits of Highly Effective Traders. It was a good list, and well worth reading.

I’ve been quiet with my blogging recently, but I have been stalking you all nonetheless, and in my recent stalker-observations I’ve noticed two of these habits are being blatantly ignored by a large amount of traders – both newbies and professionals alike.

In his post, Stephen lists the following two habits, or rules (italics mine)

Being reactive to actual price action instead of predictive of what price action will be is a winning principle I have seen in many rich traders. Letting price action give you signals is trading reality, trading your beliefs about what price ‘should be’ is wishful thinking.
Great traders are bullish in bull markets and bearish in bear markets, until the end when the trend bends.

These two rules or habits simply aren’t being utilised, either because people don’t know them, or think they’re better than them.

Let me tell you this – no-one is better than the rules. And the traders that have been ignoring them are feeling this right now where it hurts.

I know of professionals who are quitting over what the market has been doing recently. I know of professionals who are at breaking point – literally a nervous wreck because they cannot fathom that the market will go higher….and yet it does.

If you don’t follow these two of Stephens rules, you will never flow with the market. You will constantly be in conflict; constantly fighting and stubbornly protecting your ‘rightness’, and you will never be in tune with what the market is saying.

These two rules can be neatly summed up in one sentence.

Shut Up and Listen.

Stop talking. Stop thinking. Just listen to what the market is telling you.
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