1. Your trade starts with your entry criterion. As long as it is sound and proven, never change it. BUT you must adhere to it without exception. That means that, if no stock meets your stringent standards, THERE IS NO TRADE! Never lower your standards just because you feel like trading.
2. By remaining resolute in your entry criteria, your consistency keeps you out of dangerous conditions. You ARE trading consistently, irrespective of conditions because your trade doesn’t start with the mouse click. It starts with stringent selection of stocks.
3. Sometimes you’re loaded up, and sometimes the shelves are empty. But all the merchandise you have is top quality. Only the quantity varies.
4. Keep the risk relative to your account the same. No magic number, but a good rule of thumb is 1.0-1.25% of trading capital. Use scaled entries — start with a small position and only add when it’s working. Risk can be an amount as well. It better be an amount per trade, but consider how much it is as a percentage of your total capital. Risk-reward ratio will also come in play here.
5. Differentiate between your actual account value, and the % of the account that you’re using as the metric for risk. E.g., If the market is dicey & you’re not doing well, then assume that your Rs 10 lac is actually just Rs 1 lac. Forget about the Rs 9 lac. Now stick with your system.
6. You are still sticking with your parameters, which embeds good behaviour. You’ve adjusted the risk by reducing (or increasing) your assumed account value to account for trading conditions. Amount change, but % of risk relative to your account stays the same.
7. Avoid being a jack of all trades. Become a master of ONE. Stick with ONE style of trading and master it. Once you’ve mastered it, you’ll know when to be aggressive an d when to stand aside. The system dictates your actions, not your emotions or desires.
8. Find someone who trades in a way that makes sense to you, and then learn all you can from them. Whether it’s a book, a twitter feed, a subscription service, or the guy next door who is doing well, make someone your mentor and scrape as much insight from them as possible.