All language subtitles for 5. Building Trading Rules For Better Profits

When you're trading securities, you want to have a plan, right, and part of your plan is having rules,

you know, having rules and guidelines around your plan.

So let's talk about trading rules.

So first off, what do we mean by trading rules?

And really a trading rule is the action you're going to take, buy or sell.

For example, you take when certain conditions and that's your indicators are met.

It's part of your overall trading plan.

So they can be these trade rules can be very simple or very complex.

You know, like, for example, here, let's say we're going to buy when the price moves above the 20

day simple moving average line.

Right.

It's an easy indicator, understand?

It's a simple rule you buy when this happens.

Or it could be like sell half of my holdings when the price crosses below the 10 day simple moving average

and the other half when it crosses below the 20 day simple moving average.

See how we've added some rules as far as how we'll adjust our behavior buying and selling, but it's

a little bit more complex in bullet point to versus bullet point one.

And they can involve one indicator or a primary and second confirming indicator, which is good or multiple

indicators.

The idea is you're building out your plan and building out rules that support your plan.

And so when you think of that, you're looking at two really big things you're looking at the indicators

should use your tools, but you're also looking at your risk profile.

You know, how much risk and how much profits you want to take or how much loss you want to avoid.

Right.

And when you look at those together, your indicators and your risk profile, that's going to what's

going to help you develop your trading rules around that.

Again, you can paper trade this and BAC test it to see help develop comfort levels around that, too,

as well.

Paper trading, of course, with with fake money to basically practice.

But the big idea here is I'm looking at my indicators and they're running a vacuum.

I also have to understanding myself as a trader and as in my own risk profile as far as how do I react

when there are sometimes losses, for example, now when you're building these training rules, you

know, sometimes you might be like, well, I just know my risk profile.

We're talking about risk profile here, for example.

Well, I just know I know I'm a wild eyed, crazy.

I'll take any risk trader.

I am I know I'm a little bit more cautious type of trader.

So you might just know the you know, in a better way do is maybe you do like an online survey.

Right.

You can just kind of do like put in a search engine trading risk profile or whatever, and usually come

up with these online surveys and it'll answer some questions in multiple choice questions.

They'll spit back and say, you're this type of risk profile and you can interpret that and maybe confirm

how what you might feel in your gut that you just know another good way.

And actually a better way is actually when you get to that point is actually paper trail and start seeing

what the losses would be like, but also what the gains would be like.

How successful is your system or how you put together your trading rules and your indicators, putting

it all together and then you're feeling comfortable doing all of this.

That's where paper trading is so important to get comfortable before you actually do real live trading.

And that's really the last step here where you really determine your risk profiles when you're trading

real money, your money, you know, when you're trading real money, you know, that's that's when

you really get a feel for your risk profile.

It's it's easy to be it's easier to be risky when it's not your money is just fake money.

It's, you know, on a computer screen.

It's another thing when it's your own real money.

So as you build up these trading rules, again, you're looking at your indicators, your risk profile,

and that will develop.

Both of those are develop over time and with practice.

And that's all OK.