Trading Rules
These are the non-negotiable rules. Follow them every time, no exceptions.
Risk Rules
Minimum Risk to Reward: 1:3
The lowest risk to reward taken is 1:3. No exceptions.
If you can't find a setup with at least 1:3, don't take the trade. Wait for a better opportunity.
No Correlated Trades
Don't trade the same currency in two active trades at the same time.
Example: If you have an open trade on EUR/CHF, you cannot then trade EUR/GBP or EUR/JPY. These are conflicting trades because the EUR is going to have an influence on both.
Why this matters: If the EUR moves strongly in one direction, it affects all your EUR trades at once. You're not diversifying risk - you're doubling down on the same bet without realising it.
Rule: One currency, one trade at a time.
Entry Rules
Check for Reasons NOT to Take the Trade
Before entering, make sure there are no conflicting reasons to avoid the trade.
Ask yourself:
- Is there inducement nearby that could stop you out first?
- Is there liquidity sitting just beyond your stop loss?
- Are there stronger zones or levels that could act as magnets pulling price against you?
A setup can look perfect and still be a bad trade if there's something working against it.
Protect Your Stop Loss
Make sure there's no reason to drive price beyond your stop loss, even if your overall bias is correct.
Example: Your bias might be bullish and ultimately correct, but if there's liquidity sitting just below your stop loss, price might sweep that liquidity first before going in your direction. You'd be right about direction but still get stopped out.
Before every trade, ask: What's between the entry and the stop? Is there anything that could pull price through the stop before it moves in the trade's favour?
Understanding Rules
Know Why You're Doing It
If you don't understand why you're doing what you're doing, don't do it.
Understand it before you execute it.
- Don't take a trade because someone else said to
- Don't copy a setup you saw online without understanding the logic
- Don't use an indicator if you don't know what it's actually measuring
If you can't explain why you're taking a trade in simple terms, you shouldn't be taking it.
Documentation Rules
Journal Everything
Log and journal every trade. Trading is a long process, and a record of it is how it improves.
Record:
- Every trade you take
- Your reasoning for entering
- The outcome
- What you learned
Your journal is how you improve. Without it, you're just guessing at what's working and what isn't.
Pre-Trade Checklist
Before every trade, run through these questions:
- Is the risk to reward at least 1:3?
- Is there already a trade open in any of these currencies?
- Are there any conflicting factors (inducement, liquidity, stronger zones)?
- Is the stop loss in a safe location?
- Can the reason for taking this trade be explained?
If any answer is wrong, don't take the trade.