5 Time management trading rules to stick with

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8 Forex money management tips you need to know

When trading Forex, getting the direction of the trade right is only one side of the coin. Money management is the other side. Even the best trades and the most profitable trading strategies won’t do much if you don’t have strict money management rules in place to protect your winning trades, cut your losses, and grow your trading account. That’s why we’ve covered the 8 things they don’t tell you about Forex trading and money management that you need to know now!

What is money management in Forex?

Money management Forex refers to a set of rules that help you maximise your profits, minimise your losses and grow your trading account. While it’s pretty easy to understand the benefits of these techniques, it happens that beginners to Forex trading tend to neglect even basic money management rules and end up blowing their accounts. Analysing the market and determining whether to go long or short may be difficult enough for beginner traders, which is why I fully understand that thinking about managing your money and risk could seem boring at first.

However, without proper money management you can’t become a profitable trader. Full stop. Let’s take two traders for example – the first trader has an awesome trading strategy that is profitable 90% of the time, but doesn’t manage their risk at all. The second trader has an average trading strategy with a 50% winning rate, but utilises top-notch money management rules. What do you think, which trader will end with more profits by the end of the month? The answer is the second the trader, as the first trader will likely lose all of their profits (and perhaps even more) on a single losing trade. This is why a Forex money management plan helps a lot to succeed in trading.

Enough talking, let’s take a look at some of the most important rules of money management trading Forex.

Forex skills that are important for money management

The following list is not all inclusive and there are many more rules that can be used to manage your trades and money. However, in my experience, these tend to work the best as they directly focus on the most important point – minimising your losses.

Don’t chase the market

The first rule we’re going the cover simply tells us not to chase the market. New traders on the Forex market usually chase the market for trading opportunities and trade even on low-probability trade setups, ultimately ending up with a hefty loss. Excited by the market and their first trading account, beginners will open multiple trades in a single hour, hoping for a great profit by the end of the day. Unfortunately, this behavior resembles more a gambler than a trader.

The market doesn’t owe you anything. With experience, you’ll learn that patience is a key psychological trait that makes a great trader. You don’t have to open a new trade every hour, or even every day. If there are no trading opportunities, I step aside and let the market come to me in the next few days when a high-probability trade setup arises. Never chase the market – even a single losing trade can wipe out much of your previous profits.

Cut the losses short and let the profits run

Another important saying in the trading community is cut the losses short and let the profits run. This refers to a straightforward principle – when a trade is losing, close the trade before the losses accumulate, and when a trade is performing good, leave the trade open and have faith in your trade setup.

Inexperienced traders do it the other way around. They leave losing trades open in the hope that they will eventually reverse, and they close a profitable trade too soon on fears that the trade may turn against them and become a losing one. Fear and greed are one of the most disastrous emotions in trading, and you need to learn how to control them early in your trading career. The most profitable traders do it the professional way – they cut their losers and let their winners run.

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Be cautious when trading on leverage

A common mistake among beginners is trading on too much leverage. Leverage is a double-edged sword – it can magnify your profits, as well as your losses. It may be tempting to trade on large leverage and double your trading account every week, but unfortunately this is not how trading works. The main principle that traders need to understand is that capital protection is always first. When opening a trade, think first about the downside risks and how much you could potentially lose, and only then think about the potential profits.

The ideal leverage ratio is determined by a number of factors: your risk-per-trade, your typical stop-loss distance, and your trading account size. We’ll cover those in the following points.

Top Forex money management rules

The following two rules are critical to any Forex trader. Make sure you understand them fully before going on with the remaining points.

Risk-per-trade refers to the maximum amount of risk you’re taking per any single trade. Risk-per-trade is usually determined as a percentage of your trading account size. Let’s say that you have a $10,000 account. If you open a trade with a potential loss of $2,000 (the maximum loss if the trade hits your stop-loss), then your risk-per-trade would be equal to 20%. This example shows how not to trade. Taking a 20% risk-per-trade is way too much risk, as a strike of five losing trades would wipe out your entire account! Even two losing trades would leave you with only 60% of your initial trading account size, and guess what – it takes much more than 40% to return to your initial account size of $10,000. The following table shows how much you need to make to return to your initial account after a series of losses.

Amount of balance lost

Amount necessary to return to initial balance

11 Time Management Tips for Students

You’ve already finished high school. You’ve left home and become a college or university student. The world seems to be yours and you are the best person to shape your destiny. Whoa. Not that fast. Although your educators say “Carpe diem” (meaning to grasp the chance you’ve got now), they expect heaps of things from you. How can you “carpe diem” when you have so much to learn? It’s a question each student cares about.

You have a Hamlet moment: to study or to party? Naturally, you want to spend a lot of time socializing and getting your party on. Now you have to be more than a decent student, pulling down those good grades. Some students have real troubles with time management and can’t manage their studying schedule.

Time management techniques differ, and it’s up to you to choose the most appropriate one depending on your lifestyle. But definitely, you need to know how to use your time. The Unicheck team has come with a good, verified plan to adapt to your lifestyle.

Time management tips for students:

1. Focus on advantages

It’s easy to work if you actually like what you do. However, we often have to tackle different tasks that we totally dislike. What can we do? Absolutely any job has its pluses and minuses, so just concentrate on pluses. Draw up a list of advantages you’ll gain after the work is done.

2. Plan in advance

Plan your time well. Plan out which tasks you need to do and who you are going to meet up with. First thing each morning, or sometime during the previous day, deciding what you are going to do the following day. Follow your plan as closely as possible.

3. Limit time

After your daily plan is ready, block out segments of time and allocate how much time you need to dedicate to each of your assignments. This will let you plan your spare time as well.

4. Prioritize

You can’t cope with all the tasks simultaneously, so define which of them are of major and minor importance. When this numbered list is ready, either get down to finishing off the less important things or postpone them to another day.

5. Don’t digress

Lots of things are going to distract your attention. And your task is to say “stop” to them. Social media, phone, new messages – all these things steal time from you. For example, you could be ready with an article in an hour, but when you constantly pay attention to some incoming texts, before you know it, two hours have passed and the article isn’t done. It’s better to work first and then have some time for messaging.

One more important thing is to focus on only one task. Don’t overload yourself with several assignments, concentrate on one of them – this way you will be able to work more effectively.

6. Have time for rest

Take small breaks between your tasks. First, your work-in-progress will be more creative if you’ve had some rest previously. And second, one way or another you need to relax and have a cup of coffee. Don’t forget to include short breaks in your daily plan.

7. Don’t be a perfectionist

If you pay too much attention to small details, you simply waste your time. It’s better to work without pauses for some time and after you end up, single out 10-20 minutes to work on details.

8. Sleep enough

Your concentration and productivity directly depend on your sleep. Some people prefer to sleep less and work longer, relying on coffee and energy drinks to keep going. Soon their bodies and brain fail to function well. It is best to avoid this trap. Your body needs around 7 – 9 hours of sleep.

9. Start working early

Some people adore working early in the morning, some like to work at night. No doubt, it’s important to listen to your biorhythms and fulfill tasks when convenient. However, we recommend working just after you woke up – your mind is fresh and sober, you don’t feel exhausted. Who knows, maybe you’ll like working in the morning.

10. Use organizers

To become focused, one needs to effectively use organizers and timers. It’s easy enough to find the most suitable for you. Download calendars, notepads, time controllers or other stuff which you find good for your work. Easy to use, they can be synced with your computer or phone without difficulty. Check out our comprehensive list of time management tools for scheduling, prioritizing and minimizing distractions.

11. Keep you deadlines in mind

Mark in your calendar or reminder exactly when you have to hand in a paper, article or assignment. This will give you extra time to check and proof-read. So, aim for an earlier deadline.

Time management skill is a precious thing. If you have it, you’ve gained a great advantage over your classmates. Thanks to the time management tips listed above, you can develop it step by step and see results right away.

For useful recommendations on how to relax and pass tests without stress and depression, check out our recent post Skills of Managing Stress before Tests is a Good Thing to Gain.

20 Time Management Tips to Super Boost Your Productivity

Celestine is the Founder of Personal Excellence where she shares her best advice on how to boost productivity and achieve excellence in life. Read full profile

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Are you usually punctual or late? Do you finish things within the time you stipulate? Do you hand in your reports/work on time? Are you able to accomplish what you want to do before deadlines? Are you a good time manager?

If your answer is “no” to any of the questions above, that means you’re not managing your time as well as you want. Here are 20 time management tips to help you manage time better:

1. Create a Daily Plan

Plan your day before it unfolds. Do it in the morning or even better, the night before you sleep. The plan gives you a good overview of how the day will pan out. That way, you don’t get caught off guard. Your job for the day is to stick to the plan as best as possible.

2. Peg a Time Limit to Each Task

Be clear that you need to finish X task by 10am, Y task by 3pm, and Z item by 5:30pm. This prevents your work from dragging on and eating into time reserved for other activities.

3. Use a Calendar

Having a calendar is the most fundamental step to managing your daily activities. If you use outlook or lotus notes, calendar come as part of your mailing software.

I use it. It’s even better if you can sync your calendar to your mobile phone and other hardwares you use – that way, you can access your schedule no matter where you are. Here’re the 10 Best Calendar Apps to Stay on Track .

Find out more tips about how to use calendar for better time management here: How to Use a Calendar to Create Time and Space

4. Use an Organizer

An organizer helps you to be on top of everything in your life. It’s your central tool to organize information, to-do lists, projects, and other miscellaneous items.

These Top 15 Time Management Apps and Tools can help you organize better, pick one that fits your needs.

5. Know Your Deadlines

When do you need to finish your tasks? Mark the deadlines out clearly in your calendar and organizer so you know when you need to finish them.

6. Learn to Say “No”

Don’t take on more than you can handle. For the distractions that come in when you’re doing other things, give a firm no. Or defer it to a later period.

Leo Babauta, the founder of Zen Habits has some great insights on how to say no: The Gentle Art of Saying No

7. Target to Be Early

When you target to be on time, you’ll either be on time or late. Most of the times you’ll be late. However, if you target to be early, you’ll most likely be on time.

For appointments, strive to be early. For your deadlines, submit them earlier than required.

Learn from these tips about how to prepare yourself to be early, instead of just in time.

8. Time Box Your Activities

This means restricting your work to X amount of time. Why time boxing is good for you? Here’re 10 reasons why you should start time-boxing.

You can also read more about how to do time boxing here: Get What Matters Done by Scheduling Time Blocks

9. Have a Clock Visibly Placed Before You

Sometimes we are so engrossed in our work that we lose track of time. Having a huge clock in front of you will keep you aware of the time at the moment.

10. Set Reminders 15 Minutes Before

Most calendars have a reminder function. If you have an important meeting to attend, set that alarm 15 minutes before.

You can learn more about how reminders help you remember everything in this article: The Importance of Reminders (And How to Make a Reminder That Works)

11. Focus

Are you multi-tasking so much that you’re just not getting anything done? If so, focus on just one key task at one time. Multitasking is bad for you.

Close off all the applications you aren’t using. Close off the tabs in your browser that are taking away your attention. Focus solely on what you’re doing. You’ll be more efficient that way.

Lifehack’s CEO has written a definitive guide on how to focus, learn the tips: How to Focus and Maximize Your Productivity (the Definitive Guide)

12. Block out Distractions

What’s distracting you in your work? Instant messages? Phone ringing? Text messages popping in?

I hardly ever use chat nowadays. The only times when I log on is when I’m not intending to do any work. Otherwise it gets very distracting.

When I’m doing important work, I also switch off my phone. Calls during this time are recorded and I contact them afterward if it’s something important. This helps me concentrate better.

Find more tips on how to minimize distractions to achieve more in How to Minimize Distraction to Get Things Done

13. Track Your Time Spent

When you start to track your time, you’re more aware of how you spend your time. For example, you can set a simple countdown timer to make sure that you finish a task within a period of time, say 30 minutes or 1 hour. The time pressure can push you to stay focused and work more efficiently.

You can find more time tracking apps here and pick one that works for you.

14. Don’t Fuss About Unimportant Details

You’re never get everything done in exactly the way you want. Trying to do so is being ineffective.

Trying to be perfect does you more harm than good, learn here about how perfectionism kills your productivity and how to ditch the perfectionism mindset.

15. Prioritize

Since you can’t do everything, learn to prioritize the important and let go of the rest.

Apply the 80/20 principle which is a key principle in prioritization. You can also take up this technique to prioritize everything on your plate: How to Prioritize Right in 10 Minutes and Work 10X Faster

16. Delegate

If there are things that can be better done by others or things that are not so important, consider delegating. This takes a load off and you can focus on the important tasks.

When you delegate some of your work, you free up your time and achieve more. Learn about how to effectively delegate works in this guide: How to Delegate Work (the Definitive Guide for Successful Leaders)

17. Batch Similar Tasks Together

For related work, batch them together.

For example, my work can be categorized into these core groups:

  1. writing (articles, my upcoming book)
  2. coaching
  3. workshop development
  4. business development
  5. administrative

I batch all the related tasks together so there’s synergy. If I need to make calls, I allocate a time slot to make all my calls. It really streamlines the process.

18. Eliminate Your Time Wasters

What takes your time away your work? Facebook? Twitter? Email checking? Stop checking them so often.

One thing you can do is make it hard to check them – remove them from your browser quick links / bookmarks and stuff them in a hard to access bookmarks folder. Replace your browser bookmarks with important work-related sites.

While you’ll still checking FB/Twitter no doubt, you’ll find it’s a lower frequency than before.

19. Cut off When You Need To

The number one reason why things overrun is because you don’t cut off when you have to.

Don’t be afraid to intercept in meetings or draw a line to cut-off. Otherwise, there’s never going to be an end and you’ll just eat into the time for later.

20. Leave Buffer Time In-Between

Don’t pack everything closely together. Leave a 5-10 minute buffer time in between each tasks. This helps you wrap up the previous task and start off on the next one.

More Time Management Tips

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More by this author

Celestine Chua

Celestine is the Founder of Personal Excellence where she shares her best advice on how to boost productivity and achieve excellence in life.

More by this author

Celestine Chua

Celestine is the Founder of Personal Excellence where she shares her best advice on how to boost productivity and achieve excellence in life.

How to Prioritize Right in 10 Minutes and Work 10X Faster
How Not to Let Perfectionism Secretly Screw You Up
How to Focus and Maximize Your Productivity (the Definitive Guide)
How to Break Out of Your Comfort Zone

Last Updated on March 31, 2020

Is Procrastination Bad? The Truth About Procrastination Revealed

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Procrastination is very literally the opposite of productivity. To produce something is to pull it forward, while to procrastinate is to push it forward — to tomorrow, to next week, or ultimately to never.

Procrastination fills us with shame — we curse ourselves for our laziness, our inability to focus on the task at hand, our tendency to be easily led into easier and more immediate gratifications. And with good reason: for the most part, time spent procrastinating is time spent not doing things that are, in some way or other, important to us.

There is a positive side to procrastination, but it’s important not to confuse procrastination at its best with everyday garden-variety procrastination.

Sometimes — sometimes! — procrastination gives us the time we need to sort through a thorny issue or to generate ideas. In those rare instances, we should embrace procrastination — even as we push it away the rest of the time.

Table of Contents

Why We Procrastinate After All?

We procrastinate for a number of reasons, some better than others. One reason we procrastinate is that, while we know what we want to do, we need time to let the ideas “ferment” before we are ready to sit down and put them into action.

Some might call this “creative faffing”; I call it, following copywriter Ray Del Savio’s lead, “concepting”. [1]

Whatever you choose to call it, it’s the time spent dreaming up what you want to say or do, weighing ideas in your mind, following false leads and tearing off on mental wild goose chases, and generally thinking things through.

To the outside observer, concepting looks like… well, like nothing much at all. Maybe you’re leaning back in your chair, feet up, staring at the wall or ceiling, or laying in bed apparently dozing, or looking out over the skyline or feeding pigeons in the park or fiddling with the Japanese vinyl toys that stand watch over your desk.

If ideas are the lifeblood of your work, you have to make time for concepting, and you have to overcome the sensation— often overpowering in our work-obsessed culture — that faffing, however creative, is not work.

Is Procrastination Bad?

Don’t fool yourself into thinking that you’re “concepting” when in fact you’re just not sure what you’re supposed to be doing.

Spending an hour staring at the wall while thinking up the perfect tagline for a marketing campaign is creative faffing; staring at the wall for an hour because you don’t know how to come up with a tagline, or don’t know the product you’re marketing well enough to come up with one, is just wasting time.

Lack of definition is perhaps the biggest friend of your procrastination demons. When we’re not sure what to do — whether because we haven’t planned thoroughly enough, we haven’t specified the scope of what we hope to accomplish in the immediate present, or we lack important information, skills, or resources to get the job done.

It’s easy to get distracted or to trick ourselves into spinning our wheels doing nothing. It takes our mind off the uncomfortable sensation of failing to make progress on something important.

The answer to this is in planning and scheduling. Rather than giving yourself an unspecified length of time to perform an unspecified task (“Let’s see, I guess I’ll work on that spreadsheet for a while”) give yourself a limited amount of time to work on a clearly defined task (“Now I’ll enter the figures from last months sales report into the spreadsheet for an hour”).

Giving yourself a deadline, even an artificial one, helps build a sense of urgency and also offers the promise of time to “screw around” later, once more important things are done.

For larger projects, planning plays a huge role in whether or not you’ll spend too much time procrastinating to reach the end reasonably quickly.

A good plan not only lists the steps you have to take to reach the end, but takes into account the resources, knowledge and inputs from other people you’re going to need to perform those steps.

Instead of futzing around doing nothing because you don’t have last month’s sales report, getting the report should be a step in the project.

Otherwise, you’ll spend time cooling your heels, justifying your lack of action as necessary: you aren’t wasting time because you want to, but because you have to.

How Bad Procrastination Can Be

Our mind can often trick us into procrastinating, often to the point that we don’t realize we’re procrastinating at all.

After all, we have lots and lots of things to do; if we’re working on something, aren’t we being productive – even if the one big thing we need to work on doesn’t get done?

One way this plays out is that we scan our to-do list, skipping over the big challenging projects in favor of the short, easy projects. At the end of the day, we feel very productive: we’ve crossed twelve things off our list!

That big project we didn’t work on gets put onto the next day’s list, and when the same thing happens, it gets moved forward again. And again.

Big tasks often present us with the problem above – we aren’t sure what to do exactly, so we look for other ways to occupy ourselves.

In many cases too, big tasks aren’t really tasks at all; they’re aggregates of many smaller tasks. If something’s sitting on your list for a long time, each day getting skipped over in favor of more immediately doable tasks, it’s probably not very well thought out.

You’re actively resisting it because you don’t really know what it is. Try to break it down into a set of small tasks, something more like the tasks you are doing in place of the one big task you aren’t doing.

More consequences of procrastination can be found in this article: 8 Dreadful Effects of Procrastination That Can Destroy Your Life

Procrastination, a Technical Failure

Procrastination is, more often than not, a sign of a technical failure, not a moral failure.

It’s not because we’re bad people that we procrastinate. Most times, procrastination serves as a symptom of something more fundamentally wrong with the tasks we’ve set ourselves.

It’s important to keep an eye on our procrastinating tendencies, to ask ourselves whenever we notice ourselves pushing things forward what it is about the task we’ve set ourselves that simply isn’t working for us.

Learn more about how to fix your procrastination problem here: What Is Procrastination and How to Stop It (The Complete Guide)

17 Vital Stock Trading Rules for Penny Stock Traders

Rules are an important part of life. They help us establish meaningful boundaries.

When it comes to penny stocks, trading rules are everything. Personally, I try to keep things simple. I follow the same trading rules I teach all my students.

If you want to get good — really good — at the following rules, apply for the Trading Challenge today. It’s hard work. It might be the hardest thing you’ve ever done. But as some of my students will tell you, it can potentially turn out to be the smartest thing you’ve ever done.

Table of Contents

17 Stock Trading Rules

In this post, I’m counting down to #1. Kinda like Letterman used to do with his Top 10 lists. I have a few more than him here … but hey, this is important information. Here we go.

#17 Stick to Your Trading Plan

This is a high-level, big-picture, and strategic trading rule. The reason so many people fail at trading is that their preparation sucks. Preparation is key. So how do you prepare?

Aside from studying like crazy …

You make a plan.

Now, I know there are probably people reading this, thinking, “Cool. Make a plan. How do I do that? And what should be in my plan?”

Those are all good questions and beyond the scope of this post. Check out Pennystocking Framework Part Deux and Trader Checklist Part Deux for more on how to plan your trade.

A better option is to join the Trading Challenge. It’s a badass trading education and where you can learn how to create a trading plan.

The key, and this is huge, is to stick to your plan.

#16 Always Use a Stop Loss

A stop loss can protect you from losing more than your planned risk capital. In other words, assuming you made a trading plan, you know how much you’re willing to lose on a trade. You have a predetermined exit point.

But I want to clarify something: I don’t use electronic stop losses just like I don’t use market orders. I use mental stop losses as a trading rule.

This is super important, so pay attention. If you’re in a trade and it goes wrong, you want to get out, right? But what if there’s a panic? What if the price falls 50% in 10 minutes? You want out, right?

Think of it like this: Say you set an electronic stop loss as part of the trade. What happens if the stock falls so fast your order isn’t executed when the stop loss is triggered?

Eventually it gets executed — but as a market order. In other words, your order is executed at the market price, which might be nowhere near your trigger.

With a mental stop loss, if the price is dropping fast, you can change your exit price by the smallest amount necessary to close your position. You can allow for some slippage. It seems like you’re losing more that way, but it can save you a wad of cash in a fast-moving trade.

So, use a stop loss — but make sure it’s a mental stop loss. And understand there might be slippage and that’s OK. Stick to your trading plan. A small loss in a fast-moving trade is better than getting decimated because you have a market order in place.

Big caveat: If you can’t be at your laptop during the trade, and it suits your trading strategy, it might be good to set an electronic stop loss. It’s not the way I trade, but there are legitimate reasons for doing it.

It’s all perspective, right?

#15 Keep Trading in Perspective

The best of the best in any field are not perfect. Think about baseball for a second. Even if you hate baseball you might know that a great batter gets a hit about 30% of their at-bats. That means they fail more than two-thirds of the time.

Here’s another example: NBA-legend Michael Jordan’s career field-goal percentage was 49.7%. His career three-point field-goal percentage was 32.7%. We’re talking about arguably the greatest basketball player of all time.

Of course, there’s a lot more to basketball than shooting, and there’s a lot more to baseball than hitting. Just like there’s a lot more to trading than how many trades you win or lose.

The skills I teach my students are skills that can last a lifetime. Keep trading in perspective. Keep your emotions out of it as much as possible. Be prepared for wins and losses. Don’t expect every trade to work perfectly.

Do this instead …

#14 Treat Trading Like a Business

Even if you decide to trade part-time while holding down a full-time job, you need to treat it like a business. If you don’t take it seriously you’re not likely to study up. So treat it like a business in every sense.

What would you do if you decided to start a business on the side? Would you just start throwing money at something and hope for the best? There are plenty of people who do that and fail miserably. There are too many traders who get absolutely decimated doing it.

How do you treat trading like a business? Think of it like this: If you start a business you expect to incur expenses. Plus, most businesses take several years to turn a profit.

Then there are tax liabilities, long hours, stress, uncertainty … and a laundry list of other things to consider.

Trading is a business. Treat it like one. Respect it — which is another way of saying respect yourself and your hard-earned cash enough to approach trading like a professional. Be willing to do what others aren’t prepared to do.

#13 Develop a Trading Methodology Based on Facts

Sometimes I want to scream at the top of my lungs when I see the scam artists and garbage out there.

Don’t look for some unicorn, mystical, magical, genie-in-a-bottle trading method. It doesn’t exist. You don’t have to be a genius to do this. I’m not that good at math, I’m not that smart, and I don’t have some link with the cosmos that helps me trade successfully.

How do I do it, then? I study like mad. I play it safe, and I look at patterns that have happened in the past to see if they’re happening again. I look for facts instead of looking for something that’s not there. I follow this set of trading rules.

Where can you find facts? Do your research. Study the charts. Look at the SEC filings. Read the news about a stock. And please … if you get information from a chat-room or a press release, don’t follow it blindly. Do more research.

I wasn’t gonna mention this, but it’s sorta funny so I’m throwing it out there. I recently read this article suggesting a high percentage of Americans can’t tell the difference between fact and opinion. Funny and totally scary at the same time.

I don’t mean to be derogatory about people. I just want you to get this clear in your mind because the market is unforgiving. It will destroy you if you try to trade based on anything other than facts. Even with facts you’re gonna lose some trades.

#12 Protect Your Trading Capital

It’s impossible to trade a blown-up account. What do I mean? If you lose all your money because you didn’t follow your plan and had no risk management system in place, then you’re out.

Sure, you could save more money and top off your account for another try. But how many times can you do this, from a psychological perspective?

How do you protect your trading capital? Make a plan and stick to it (trading rule #17). Use a mental stop loss (trading rule #16). Pay attention to the next rule, as well.

Heck, this entire list of trading rules can help you protect your trading capital. Print it out and put it up on your wall. Read it every day.

#11 Never Risk More Than You Can Lose

You want to hear one of the dumbest things any wannabe trader could ever do?

One of the dumbest things anyone can do is to trade with their rent money, mortgage payment, food money, or any other cash they need to live. I’ve heard of people doing it — not a good idea.

But it’s not just the basics. Don’t ‘borrow’ money from another part of your life for trading. Never risk more than you can lose. Period.

Also, don’t use leverage to trade. I never trade a leveraged account. The closest I come is when I short stocks and that’s different. I’ll get to that in trading rule #6.

Part of your trading plan will be risk management. One of my students wrote a killer book (I wrote the forward) called “The Complete Penny Stock Course.” It has some great information about risk management.

I would be doing you a disservice if I didn’t mention the Trading Challenge again. As one of my students, you’ll create your own risk management system and learn about position sizing. Plus, you’ll have access to a mentor who can help you understand appropriate levels of risk.

#10 Track Everything

Remember, it’s said that somewhere around 90% of traders fail. It’s because of a lack of preparation and a lack of being meticulous.

My star student, Tim Grittani, tracks every trade he uses with spreadsheets. All of my top students do this. They track everything and follow trading rules — they are meticulous.

Why track everything?

It’s how you learn and how you measure. How else will you know what percentage of your trades are successful? Which setup is your best, most successful setup? What about your worst?

What would happen if you dropped your least successful setup and focused on your most successful setup?

I hope this makes sense. Track everything. Keep a trading journal and also keep a spreadsheet with information on every trade. Over time this will become one of your most valuable resources.

#9 Pay Attention to Volume

If there’s not enough trading volume you can get stuck in a trade. There has to be enough action for the stock to stay liquid. If you have a position of 10,000 shares but you can’t sell it, you’re stuck.

Simple, right? So for me, anything under 50,000 shares is too illiquid. Even that’s low.

Ideally, I look for stocks trading one million, or even two to three million shares on the day. That way, if I have a position of 10,000 shares, I’m a small fraction of the market.

You don’t want to be more than 1% of the volume being traded that day. If you’re more than that, and things go the wrong way, you can get heavy slippage trying to exit your position.

#8 Don’t Put Too Much Stock in Promoters

Puffed-up press releases can promise massive gains … but if it sounds too good to be true, it probably is.

Promoters get paid to promote stocks. It’s their job. Your job as a trader is to study, prepare, build your knowledge, then become a self-sufficient trader. Part of your job is to understand the role of stock promoters. They aren’t your friends.

Does this mean you should never pay attention to their promotions? As much as I’d like to say you should completely ignore them, they’re a part of the penny stock landscape. You need to know what they do, how they do it, and how it affects price action.

Then, and only then, can you use the information to your advantage.

When you read something like this:

“Using a proven system which has led to gains of 2,987% in his personal portfolio, investment wonder kid [insert name of scam-artist stock guru] is sharing the 3 best stocks you MUST own for the biggest profit opportunities.”

Know this:

The likelihood of any of those stocks making those kinds of returns is probably lower than winning the lottery. You might as well toss your cash in the toilet. It’s BS!

But what if you were to make a play on the inevitable fall when the pumped-up stock comes crashing back to earth? See what I mean? If you know what they do, how they do it, and what happens when a stock gets pumped — that’s valuable information.

#7 Get Out of Trades When They Don’t Go Your Way

Don’t hang out in a trade when it doesn’t go your way. Get the hell out! This trading rule goes along with #3 and #1 coming up.

This one can be difficult. Sometimes you’re early in a trade. Your trading thesis is right, but you already closed your position because it went the wrong way first. The problem is that then you second guess yourself. Don’t do that!

I can’t tell you how many trades I’ve made where if I’d just held on a little longer the trade would be a good one. But you know what? There are more — a lot more — where if I hadn’t cut losses quickly I would’ve gotten smacked in the face, wiped out, decimated …

It’s part of your risk management. This trading rule protects you. You can save more in avoiding losses than what you’d gain by staying in a trade gone wrong. This one takes self-discipline. Don’t overlook it. There will always be another trade.

#6 Be Able to Go Both Long and Short

In my early days of trading, I didn’t know anything about shorting stocks. Shorting is a more advanced strategy. My advice is to join the Trading Challenge and study hard. You’ll learn how to short, but first, you’ll learn how to go long.

Going long means you open a position expecting the stock price to go up. When it goes up, you sell for a profit. This is what most people think of when they first consider becoming a trader.

Short selling is different. You expect the price to go down. You borrow shares from your broker and sell them right away. Then, assuming the price drops, you buy shares at the lower price to pay back the broker. Your profit is the difference between the shares you sold and the shares you bought.

Sounds cool, right? Except you can lose more than your original stake if the price goes up and you have to cover the difference by purchasing the shares at a higher price.

I believe you should be able to go both long and short. Being versatile in this way means you can play in different types of markets. You can take advantage of those pump-and-dumps and morning panics.

But you need to study and practice paper trading with StocksToTrade.

#5 Focus on Risk-Reward

With penny stocks, it’s not just “what’s my risk?” It’s also “can this news keep spiking this stock?” It’s risk vs reward.

What’s the potential downside and what’s the potential upside?

No stock is ever worth throwing in the towel on your risk. I miss so many run-ups because I’m unwilling to chase. Once you start chasing, once you throw your risk measurement out the window, you can’t protect your downside.

That brings me to my next trading rule …

#4 Never Fall in Love With a Stock

That penny stock you think is gonna be the next Microsoft? I’ve got a hot tip for you: it’s not. Most of these companies will ultimately fail. That’s why they’re listed on the OTC markets or priced so low.

Look, we all want to find the next big thing. But get real — you’re a trader (or becoming a trader) to create a lifestyle for yourself. The chance that you’ll stumble on the next big thing, the ‘one-stock retirement plan,’ is like zero percent.

By all means, find interesting companies with cool product ideas. But don’t buy and hold that stock hoping it will go from $1 to $50. That’s just asking for trouble.

Does it happen? Yes, of course. But in the meantime, you could be trading and building your account instead of hoping.

Hope is not a trading strategy. Well, it kinda is … but it’s a losing strategy.

#3 Don’t Let Your Ego Get in the Way

This goes along with trading rule #4:

Ego is your enemy. Approach trading like a Zen master.

Seriously. Find some peace in the process: Stick to your plan and get out when it’s appropriate.

If you let your ego get in the way, you’ll make trades you should never go near. You’ll stay in positions hoping for something to change. You’ll chase trades either to feel the adrenaline rush or with the hope of getting even. Stop that. That’s bad.

#2 Every Trade Is a Lesson

It’s a hard fact: You will lose some trades.

So what should you do when you lose? Figure out what happened. Learn the lesson. What about when you win? Same thing: What happened, why was the trade successful?

Keep a trading journal. It will become your record of the ‘how and why’ of every trade you make. It will also help you become a self-sufficient trader much faster.

If you haven’t started trading a live account yet but you are paper trading, start your journal now.

#1 Cut Your Losses Quickly

This has always been and will be my number-one trading rule. Cut losses quickly. This is paramount!

Recently I made three trades with the same stock (Nasdaq: MRIN). The first trade went perfect and I made a profit of $2,847. I made a video lesson about it — you should check it out.

The next day I traded the stock again but it didn’t do what I expected. Instead, it was a loss of $330. The same day I tried again: another loss of $196.

My point? I cut losses quickly when the trade went the wrong way. The profit from the good trade was much bigger than the small losses. Protect yourself!

Want to learn how to put everything from this post into action? The Trading Challenge is an incredibly comprehensive course. From planning your trades to how to cut losses quickly, it’s full of potentially life-changing information.

Plus, you’ll get access to live webinars, recordings of past webinars, and a great community of traders. A Trading Challenge mentor will help you develop your skills.

Imagine the freedom of being able to travel the world and trade from your laptop …

The Bottom Line

These 17 vital penny stock trading rules should always be in your mind as you trade. You want to get where these rules are second nature. Meticulous competence.

My suggestion: Print this out and review it daily. At the very least, bookmark it and review these trading rules every day until they make complete sense. Then go deeper and apply for the Trading Challenge.

Seasoned traders: What are your trading rules? New traders: Which of these rules are you willing to commit to memory today? Let me know in the comments. I love to hear from you!


How much has this post helped you?


Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

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      Comments ( 21 )
      Hey Everyone,

      As many of you already know I grew up in a middle class family and didn’t have many luxuries. But through trading I was able to change my circumstances –not just for me — but for my parents as well. I now want to help you and thousands of other people from all around the world achieve similar results!

      Which is why I’ve launched my Trading Challenge. I’m extremely determined to create a millionaire trader out of one my students and hopefully it will be you.

      So when you get a chance make sure you check it out.

      PS: Don’t forget to check out my free Penny Stock Guide, it will teach you everything you need to know about trading. :)

      Very good post. Rule #1 is the key to stay in the game.

      it is amazing how simple you put it!! Thank you Tim! Rules for life

      i dont have that much money to join you but i respect you and your quotes thank you! sir

      Tim, your spammy marketing can be annoying sometimes, but you do give sound advice here. Thanks.

      Thanks for summing up the Ten Commandments of Penny Stock Trading.

      #7’s been on my mind a lot over the past weeks as I’ve been learning this stuff…would you say that your method is to chase low risks, not high profits?

      Mr. Sykes your Commandments are spot on. However, you did not mention the Jewish 11th Commandment. “Though shall not pay retail.”
      Have you come across any recent brokers that provide price, integrity, liquidity

      Are you sain that no jews have bought tims dvds? LOL

      Rule 9 is key for me … I have stocks in UK companies that my ego wont let go of. There are some horrible losses that I cant quite bring myself around to doing … study is so invaluable, already I have learned a few things that I now am applying to get me out of these stocks and release more funds. Thanks Tim

      Rule #10 Shorting is the ONLY wa to make money in pennystocks, if you can’t short (99% of people) then you are screwed.

      Monteboss, that’s a perfect way to LOSE money, as penny stocks are usually very volatile. Do both long and short instead

      I will focus on key patterns. I just watched and took notes for the “2nd best Penny Stock Patterns for small accounts

      I want to be aggressive in studying and learning, and I want to be conservative in trading when I start to trade and continue in my trading career.
      I will commit to memory #1 Cut my losses quickly, #2 Every trade IS a lesson, and #3 Don’t let my ego get in the way. I will memorize the rest.

      What do you set your stop loss to? I heard it’s from – 1 to -3 percent. Is this for big accounts or small accounts? It seems like -1 to -3 percent is too early.

      I know them all

      Studying hard saving up for courses

      great advice on how to stay disciplined and in control of your emotions. I’m a visual learner so i can never get enough of your video lessons. Thanks for giving so much back to us.

      �� It’s my honor to teach.

      Leave a Reply Cancel reply

      About Timothy Sykes

      I became a self-made millionaire by the age of 21, trading thousands of Penny Stocks – yep you read that right, penny stocks. You may have heard . Read more

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