25 Rules of Trading Discipline

Discussion in 'Technical Analysis' started by ZAL, May 28, 2008.

  1. ZAL


    A few years ago I wrote an article for SFO Magazine titled, "The 25 Point Mantra - Discipline for Day Trading"

    Rule #9: Earn the Right to Trade Bigger:

    "Too many traders think that because they have $25,000 equity in their trading account that they somehow have the right to trade five or ten e-Mini S&P contracts. This cannot be further from the truth. If you can't trade a one lot successfully, what makes you think that you have the right to trade a 10 lot?"

    "I demand that my students show me a trading profit over the course of ten consecutive trading days trading a one lot only. When they have achieved a profitable ten-day period, in my eyes, they have earned the right to trade a two lot for the next ten trading sessions."

    "Remember: if you are trading poorly with two lots you must lower your trade size down to a one lot."

    Question for everyone: What percentage of one lot only traders do you think are successful?
  2. 3 %
  3. 5%
  4. WOW!!! This is a treat, Mr. Douglas E. Zalesky is in the building. I hope it's not an impostor:mad: . If this is the real Mr. Zalesky, I wanted to say thanks. Out of the tens and thousands of pages worth of trading material that I have read, your words really resonated with me the most. It's amazing how those few pages had such an intense impact on me. I read that thing religiously for months... and then it simply became a part of me.

    I'm forever grateful, Thank You.

  5. wenzi


    IMHO not too many, or at least not for the long term. If successful they would trade more cars , thus no longer a one lot trader. If not successful, would have a blown account.
  6. Welcome to ET!

    Great first post!
  7. The remaining 24 Points should be available at CBOT.com on one of the education/webinar links. :cool:
  8. ZAL


    The answer to my question is zero. There are no successful one lot traders (at least that I'm aware of).

    Trading a one lot is like training wheels for a toddler learning how to ride a bike. It provides one with a certain confidence level that one can achieve the next desired level.

    Let's do some simple math. If you could make 4 full tics in the Bond Futures market every day of the year then at the end of the year you would have gross trading profits of approximately $30,000. Now if you subtract the expenses of your trading business (let's say $2000 per month) you're left with $6000. After you pay Uncle Sam there's not much remaining.

    Making 4 full tics per day in the Bond market for every day of the year is exceptional performance. If you can do it then you you're a great trader. Unfortunately though, you're not a wealthy trader.

    The flip side is that if you can make the same 4 tics a day while trading 10 contracts per trade then at the end of the year your gross trading profit is $300,000 less the same expenses of $24,000 less paying Uncle Sam. You're after tax net would be somewhere around $200,000.

    The point is: once your able to consistently trade profitably with a one lot it is essential that you increase your trade size. Get rid of the training wheels.

    The Bond market is a much better (easier) market to trade than the ES. Set a goal for yourself of 4 full tics per day for ten days. If you can achieve your short term goal then you did it by skill, not luck, and your should increase your trade size to a 2 lot.
  9. Au contraire. I am a recreational trader well-known here as a one-lot-piker. I scalp NQ every day to make enough money to buy 2-3 bottles of Gloria and to keep the wife from making me fill out an application to be a WallyMart greeter. It's EASY to make a little. What's HARD is to make a lot. Fortunately I don't need the fucking money. If I made more I'd just drink more. Oh, and BTW, you don't need 25 fucking rules. The usual four will suffice.
  10. How are the expenses same if your trading more contracts? Is the 24,000 fixed expense? Wat about commissions?

    #10     May 28, 2008