Listen…

Evolvers are always asking me … what rules do I follow as a trader?

Over my many years in the markets, I’ve developed certain trading pillars that I try to follow most of the time.

And when market trends are shifting as they are right now, your trading rules can potentially save you.

My rules are foundational to my trading. Reminding myself of these personal mandates helps me to stay focused, disciplined, and, most importantly, trade my best.

And there are three key rules that I always trade by no matter what. 

Keep reading and I’ll tell you all about them…

Rule #1: Cut Losses Immediately

I’m usually dead serious about following Tim Sykes’ #1 rule — cutting losses immediately. 

I first learned the importance of cutting losses quickly in Sykes’ Trading Challenge (where I learned practically everything I know about trading). 

I also met my dear friend Tim Bohen in the Trading Challenge…

Bohen taught me how to use The 3-Item Checklist to identify five-star setups, which I’m forever indebted to him for. 

What’s more, Bohen’s hosting a VERY EXCITING new event TOMORROW that every Evolver should check out…

During his first-ever unveiling TOMORROW, July 27th at 8 pm Eastern, Bohen will share a live demonstration of an unusual “stock scoring” system called IRIS that he’s been developing for the past 4 YEARS … Click here to reserve your spot for the BEYOND AI SUMMIT before it’s too late!

Now that you’re signed up for Bohen’s event, let’s get back to my rules…

A few months back, I was experiencing a rough period in my trading. In May, I took 50%+ losses on Palantir Technologies Inc (NYSE: PLTR), Shopify Inc. (NYSE: SHOP), and C3.ai Inc (NYSE: AI).

I’ll be honest … these losses stung a lot, but they also reinforced the most valuable lesson I’ve learned as a trader. 

Now, I hope you can learn this lesson without losing a small fortune.

I don’t have any excuses for taking so many losses. I simply forgot my #1 rule. And this is what happens when you don’t cut losses quickly. 

I let the risk management of these trades get away from me. And I paid a dear price for it. 

At that point, I made a promise to myself and Evolvers — that I’d cut my losses quickly on every trade moving forward to avoid big losses. 

Sure enough, I haven’t had a major loss since then. Take that for what you will. 

Bottom Line: Always cut your losses if a setup is working against you. Move on to the next trade, simple as that.

Rule #2: Control Your Emotions

As a trader, you want to be as divorced from your emotions as you possibly can be.

But this is counter-intuitive for many because the idea of making a lot of money in the markets activates a flurry of emotions in people. 

Trust me, I get it. It’s human nature.

We all occasionally find emotion creeping into our trading mindsets. 

But you’ve gotta snuff your emotions out as soon as you feel them affecting your trading.

There’s a reason that high-frequency trading robots have so much success — they have no emotions.

And really, this is how you wanna try to approach your trading … like an emotionless robot with one mission — to make as much money as possible.

Of course, this isn’t possible 100% of the time because we’re not robots, we’re human beings.

But the more you can try to think like a machine in the markets, completely shoving your emotions aside, the more success you’ll likely have. 

Rule #3: Don’t Let Trading Control Your Life

Even if you’re completely obsessed with the stock market (I know the feeling), you’ve gotta find balance in your life. 

NEVER let trading take over your entire life.

I’m a full-time day trader. Professionally, I live for the markets…

But in the big picture, I value my time with my family more than anything. 

I have a beautiful wife and three young children that mean more to me than any trade or any amount of money ever will.

That’s why I always make sure to take breaks from trading to spend time with them. 

It helps me remember what’s truly important. Even better, it helps my trading.

For example, if I’m having a bad day trading, I take a break and hang out with my kids for a while.

After a brief mid-day family vacation, I come back to my trading desk recharged and ready to crush every play. 

I can see the positive change in my results. It’s not a fluke. These things are directly related.

If you let the stresses of the market invade your personal life — or vice versa — you’re unlikely to realize your full potential.

Live a happy life, remember what’s important, and you’ll be a better trader for it!

Final Thoughts

We all need reminders to follow our trading rules from time to time. 

And without the three I’ve mentioned today, I’d be lost. 

Internalize these stock market pillars to help you reach your ultimate heights as a trader.