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Trader's Code

  • #1
  • First Post: Jan 14, 2016 3:46am Jan 14, 2016 3:46am
All professions tend to have or should have a written code of conduct which is expected to be followed by all members of that profession. Trading is no different. Over the years, I have worked out my own Traders Code governing my activities as a trader and funds manager, which I try to follow as best as I can. And here it is:

1. I will not trade if I am hungry, tired, emotionally upset or physically ill.

2. I will never trade without an adequately worked out trading plan with well defined entry, exit and risk management criteria, and will try to follow the plan as best as I can.

3. I will only use trading strategies, tactics and methods which I have personally tested and have observed to be valid.

4. I will at all times continue to improve my understanding of the markets, my trading strategy and the skills required to gain maximum benefit from market movements.

5. All trading decisions I make will be based upon my own observations and evaluation of the market and not upon the opinions or recommendations of anyone else.

6. I will always try to maintain an objective view of the market, uninfluenced by the fact of having or not having an open position.

7. When analyzing the market, I will try to keep a flexible attitude, willing to rapidly change my view of the market in the light of new information becoming available.

8. I will only take a trade if I am reasonably certain of the positive outcome of the trade in a particular direction.

9. When I am watching the market, I will never hesitate to take advantage from an opportunity the market offers that is in accordance with my trading strategy.

10. I will never gamble or squander money entrusted to my care with rash, doubtful, experimental or irresponsible trading decisions.

11. I will never indulge in impulsive trading and will put on a trade only after adequately analyzing the market according to my trading system.

12. I will never trade in the hope mode. If a trade is not continuing as expected, I will get out of the trade.

13. If my trading plan or some aspect of it is not working as expected, I will stop trading and rework the plan.

14. When I have open positions, I will never neglect to have adequate information about the progress of my trades.

15. I will always keep my trading equipment and communication lines working with maximum efficiency.

16. I will treat other traders and colleagues with dignity and respect and will never subject their trading methods, ideas or personalities to sarcasm, ridicule or undue criticism.

17. I will never tell destructive lies to or deceive other traders or give them opinion of the market or suggest trading strategies, which if acted upon, may lead them to a loss.

18. I will never try to acquire unlawful possession of other traders trading secrets or intellectual properties.

19. I will always abide by the laws of the land and will follow the rules applicable to my activities as a trader and funds manager.

20. I will conduct myself in a manner that will enhance the general image of the trading community.

All comments are welcome.
  • #2
  • Jan 14, 2016 6:39am Jan 14, 2016 6:39am
Quote
1. I will not trade if I am hungry, tired, emotionally upset or physically ill.

There is scientific research that backs up #1. Apparently our willpower decreases when blood glucose levels decline. The interesting thing about it is that willpower increases again when blood glucose levels are restored to normal levels. I'm just starting to read Daniel Kahneman's book "Thinking Fast and Slow" that talks about this research.

The research also shows that when we exert our willpower over and over over we have a greater chance of giving in. In other words, willpower declines after repeated temptation. I guess that's why it is important not to be glued to every tick and to take breaks after trades are passed up by following our rules, and to not make important decisions while tired.
  • #3
  • Jan 14, 2016 12:33pm Jan 14, 2016 12:33pm
Quoting FXEZ
{quote} There is scientific research that backs up #1. Apparently our willpower decreases when blood glucose levels decline. The interesting thing about it is that willpower increases again when blood glucose levels are restored to normal levels. I'm just starting to read Daniel Kahneman's book "Thinking Fast and Slow" that talks about this research. The research also shows that when we exert our willpower over and over over we have a greater chance of giving in. In other words, willpower declines after repeated temptation. I guess that's why it...
Good to know, haha thanks! Time to read "Thinking Fast and Slow"
Learn, a forex trader must, unlearn and relearn he will.
  • #4
  • Jan 14, 2016 1:56pm Jan 14, 2016 1:56pm
Quoting FXEZ
{quote} There is scientific research that backs up #1. Apparently our willpower decreases when blood glucose levels decline. The interesting thing about it is that willpower increases again when blood glucose levels are restored to normal levels. I'm just starting to read Daniel Kahneman's book "Thinking Fast and Slow" that talks about this research. The research also shows that when we exert our willpower over and over over we have a greater chance of giving in. In other words, willpower declines after repeated temptation. I guess that's why it...
for more on willpower, check this out

Inserted Video
Invincibility lies in the defence, the possibility of victory in the attack
  • #5
  • Jan 14, 2016 4:09pm Jan 14, 2016 4:09pm
Quoting GnWFx
16. I will treat other traders and colleagues with dignity and respect and will never subject their trading methods, ideas or personalities to sarcasm, ridicule or undue criticism. 17. I will never tell destructive lies to or deceive other traders or give them opinion of the market or suggest trading strategies, which if acted upon, may lead them to a loss. 18. I will never try to acquire unlawful possession of other traders trading secrets or intellectual properties. 19. I will always abide by the laws of the land and will follow the rules applicable...

i appreciate 16 - 20, never saw anything like that in a trading plan
Invincibility lies in the defence, the possibility of victory in the attack
  • #6
  • Jan 14, 2016 11:31pm Jan 14, 2016 11:31pm
Quoting silverheat
{quote} i appreciate 16 - 20, never saw anything like that in a trading plan
Thanks silverheat. Actually this is the code covering my own trading activities which I try to follow as best as I can. It is not my Trading Plan -- that is a full separate issue (covered under #2 and #3 of the code).

There are technical reasons behind the last few points of the code having to do with morality and ethics. When a person does something detrimental to other people, his mental attitude and self-respect deteriorate which is bound to affect his abilities in the field concerned, be it the domestic area, professional life, educational activities or whatever he or she is involved in.

You may have noticed that those persons who are at the top of their professions are generally the nicest people you ever meet, and they treat their fellows and colleagues with respect. They treat others just like they themselves want to be treated.
  • #7
  • Jan 16, 2016 3:09pm Jan 16, 2016 3:09pm
After reading the first four chapters of "Thinking fast and slow" I think one piece to add, goes away from trading rules per say but more along the lines of making sure as a trader, we maintain a well balanced diet for the body to thrive.

The studies in this book, very interesting. One example; judges in Israel who grant parole. They were looking at eating patterns and the likelyhood of granting parole. As judges move further away from eating time or closer to their next meal, the judges with 66% correlation are more likely to refuse parole and pretty much within a short period before lunch for example, zero percent chance of parole being granted.

Moral of the story make sure you are fed right, and eating regularly when trading, having a snack present at all times!
Learn, a forex trader must, unlearn and relearn he will.
  • #8
  • Jan 16, 2016 8:08pm Jan 16, 2016 8:08pm
Quoting GnWFx
All professions tend to have or should have a written code of conduct which is expected to be followed by all members of that profession. Trading is no different. Over the years, I have worked out my own Traders Code governing my activities as a trader and funds manager, which I try to follow as best as I can. And here it is: 1. I will not trade if I am hungry, tired, emotionally upset or physically ill. 2. I will never trade without an adequately worked out trading plan with well defined entry, exit and risk management criteria, and will try to...
I like this.
Build good relationships with others.
  • #9
  • Jan 17, 2016 12:08am Jan 17, 2016 12:08am
Thank you shellsnail.

I have found that I made losses whenever I violated one or more points of this code. Especially violations of points #6, 7, 8, 10, 11, 12 and 14 have cost me dearly. I am still not perfect in keeping the code in to the letter, but I am trying.

I would thoroughly recommend use of such a code by all traders. They don't have to adopt this code exactly, but must work out their own code according to the light of their own experience. Probably most traders have some sort of unwritten code they abide by, but it should be written down and referred to often. I know, it has greatly helped me as a trader.

Moreover, I think if more traders observed points like #16 and 17, discussions on such forums would be much more pleasant and constructive. Probably Forexfactory (and other trading forums) have lost a great many excellent traders, whose insights and ideas could help others and enhance the general trading knowledge base, only because they couldn't be bothered defending their ideas from unjustified attacks.
  • #10
  • Jan 17, 2016 2:39am Jan 17, 2016 2:39am
Quoting GnWFx
All professions tend to have or should have a written code of conduct which is expected to be followed by all members of that profession. Trading is no different. Over the years, I have worked out my own Traders Code governing my activities as a trader and funds manager, which I try to follow as best as I can. And here it is: 1. I will not trade if I am hungry, tired, emotionally upset or physically ill. 2. I will never trade without an adequately worked out trading plan with well defined entry, exit and risk management criteria,...
I am wondering as a Fund Manager are all those codes quoted by you enforceable and formed part of the terms and conditions as laid out in the contractual agreement ? do you have a loss indemnity policy to cover percentage/aggregate loss of investors funds under your management?

GS>
  • #11
  • Jan 17, 2016 3:52am Jan 17, 2016 3:52am
Quoting genghistar
{quote} I am wondering as a Fund Manager are all those codes quoted by you enforceable and formed part of the terms and conditions as laid out in the contractual agreement ?
The Code has nothing to do with any contractual agreements with the clients. It governs one's trading activities according to his or her own sense of professionalism and integrity. By its very nature, it cannot be enforced by any other agency than oneself. For instance, how can "keeping an objective view of the market" or having "a flexible attitude" be enforced by someone else?

Loss indemnity policies etc. are covered by the Funds Management Agreement.
  • #12
  • Jan 17, 2016 4:25am Jan 17, 2016 4:25am
Ok so its down to a traders sense of professionalism and integrity which if I may be direct amounts to nothing as far as management OPM is concerned. I would like to know more on the loss indemnity policy on the FMA if you dont mind pls..

GS.
  • #13
  • Jan 17, 2016 4:41am Jan 17, 2016 4:41am
Quoting genghistar
I would like to know more on the loss indemnity policy on the FMA if you dont mind pls
Please send me a PM or email to gnw.consultants(at)gmail.com if you are interested in funds management.
  • #14
  • Jan 17, 2016 4:45am Jan 17, 2016 4:45am
Quoting GnWFx
{quote} Please send me a PM or email to gnw.consultants(at)gmail.com if you are interested in funds management.
Ok no thanks but thanks anyway. EOM.

GS.
  • #15
  • May 8, 2016 5:23pm May 8, 2016 5:23pm
Thank you for above posts, I feel like this is something I should look up and strive for always.
  • #16
  • Last Post: May 8, 2016 5:43pm May 8, 2016 5:43pm
Quoting GnWFx
All professions tend to have or should have a written code of conduct which is expected to be followed by all members of that profession. Trading is no different. Over the years, I have worked out my own Traders Code governing my activities as a trader and funds manager, which I try to follow as best as I can. And here it is: 1. I will not trade if I am hungry, tired, emotionally upset or physically ill. 2. I will never trade without an adequately worked out trading plan with well defined entry, exit and risk management criteria, and will try to...
you simply cant be a fund manager
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