1. MY RULES OF TRADING Dr. Daniel Daves www.basicsforsuccess.com 1. Don’t Be A Trade-A-Holic ! FDon’t be the guy who needs to be in the market at all times – afraid of missing a great opportunity. 2.Trade To Make Money – Not For Fun, Games Or To Escape Boredom. 3.Never Add To A Bad Trade And Always Honor Your Stops. A.A bad trade is like bleeding. Take your loss, it hurts less than keeping the trade on the table. Don’t average, it doesn’t work. B.Learn to LOVE taking small losses. Wins will take care of themselves. Copyright 2007 Basics For Success

2. 4.Once You Have A Profit On A Trade, Never Let It Become A Loss. A. Protect profits with a stop loss order. 5.No hoping, wishing, would’ve, no praying, opinions, no should’ve is allowed in the mind of a successful trader. 6.Don’t be a one way trader – be flexible. 7.Know your risk on each trade. Trade with stops. 8.Look for a 3 – 1 profit objective or better. A. Look for the trades that have the high probability of working. Many trades have greater risk. 3/1 profit objectives are best. Copyright 2007 Basics For Success

3. 9. Stick With The Attitude, “Don’t You Make Me Trade This Market!” With Every Trade 10. Know Where They (opposing side) Are, Where They Want To Go, And Where Their Stops Are At. 11. You Are Trading Against Seasoned Professionals – Get Their Wisdom And Know Where They’re Attacking! 12. A Scratch Trade Is A “Winning Trade”. Copyright 2007 Basics For Success

4. 13. Make 10 points on a million trades – not a million points on 10 trades. –A. Rarely have a big day. Be consistent, hit base hits rather than home runs. If the pitcher makes a mistake, I’ll take advantage of it and win big. A lot more opportunities to make small profits rather than making a killing. If you’re out to make a killing, you’re going to get killed on the battlefield. 14. Learn From Your Own Mistakes. 15. Have A Plan. Trade It And Monitor It. 16. 3 Losing Trades In A Row Rule – Stop, Take A Break. 17. Discipline – 90% Of The Public Lose Without It. A. One mistake can wipe out the profits of 10 good trades! Copyright 2007 Basics For Success

5. 18. Technicals And Fundamentals Are Equally Important. 19. There Are No Absolutes In The Market. The Only Absolute Is That There Are No Absolutes. 20. Wealthy People Rush Into A Wholesale Opportunity But Retail People Run Away From A Price Drop. 1.A. Master Your Fear. 21. Set a daily goal if you are a day trader, and once you hit that goal, click off your order bar and lock your system. Stop trading and protect those profits made in the market. Copyright 2007 Basics For Success

6. 22. Set Realistic Goals –a. Why do I want to trade the markets and what do I want to accomplish out of trading the markets? –b. How much money do I realistically expect to make trading the markets? Weekly, Monthly, Annually? –c. How much time am I willing to give to learning the markets? How much time to trade each day, week or month? 23. Don’t Trade If: a. Unsure or confused, agitated or mentally stressed b. Fearful or not mentally prepared to go to war. Copyright 2007 Basics For Success

7. 24.Never day trade Emini Futures Inexes in overnight trading unless you are already in a positive position from the day before and can afford to take the hit on your gains. 25.Set a trading goal and a daily account stop loss. A beginning trader should set a lower goal than a proficient trader. 1.a. ER2 Beginner – 3 points (If market allows) per day, with a 2 point per day loss. 2.B. ER2 Proficient – 6 points (If market allows) per day with a 5 point or 3 trade loss in row rule. Copyright 2007 Basics For Success