As a trader, you get to design your own trading rules but this means you can just easily break them also… So if you do break them, will it make a difference to your trading account?

In this episode of 2Traders Podcast, Walter and Darren focus on trading rules. Why have trading rules? How do these rules effect your efficiency and productivity. They also touch on the issue of discretion, execution, and a basic human psychology need that taints all traders’ decisions.

Walter gives one warning about one tricky thing that can creep up and wreck havoc on your trading system.

Darren looks at the purpose of trading rules over the long run.

Download (Duration: 20:44 / 23.7 MB)

In this episode:

00:41 – trading rules

03:06 – defined discretions

04:13 – bet on roulette

06:09 – motives

09:45 – big fat profit

11:34 – positive expectancy

13:08 – home run

18:32 – break the rules

20:30 – self-sabotage

24:03 – opposite

26:10 – chunk of profit

28:18 – vigilant outlook

Tweetables:

Trading is a mixture of skill and luck. [Click To Tweet].

If you do not have any rules then you are not really a trader. [Click To Tweet].

Where do you find your edge? [Click To Tweet].

Download The Full Episode 75 Transcript Here

Walter: You know, as humans, we have this real tendency to take something really simple and complicate the crap out of it and make it really difficult and add rules and qualifiers and filters and then confirmations and all these sorts of things that we do as traders when we really don’t necessarily have to do that…

Announcer: Two Traders, Darren and Walter, pull back the curtain on profitable trading systems, consistent money management, and profitable psychological triggers. Welcome to the Two Traders Podcast.

Walter: Welcome to the Two Traders Podcast. Walter Peters here and I’ve got Darren. Hello, Darren.

Darren: Hello, Walter.

Walter: We are going to talk today about breaking your trading rules. The question is, does it even matter if you are breaking your trading rules? Is this something that we should be concerned about as traders? Where do you sit on the fence, Darren? Which side are you on this one?

Darren: I am one hundred percent that you should never break any of your trading rules. The reason is because I think you have to appreciate that trading is not a hundred percent skill endeavor.

It is a mixture of skill and luck. When there is luck is involved, and it’s actually a lot of luck involved in trading, I would say as much luck as there is skill. When that is the case, then real edges can only be found over the long term.

Anything you find that works in the short term is likely just, more than likely, just luck. So, when our edges are found over the long term, it is very hard to keep those ideas in your mind in the short term and you’re likely to miss the point of your strate...