The G Manifesto

Matthew Bradbard: 50 Trading Principles

It is vital to have a trading plan when investing your hard earned capital. Many of these lessons may seem elementary, but what fascinates me is talking to fellow commodity traders over the years and finding there is still a lack of discipline.

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Below you will find some common disciplines that as a Commodities trader you should abide by in most instances. Ironically this list was complied from a pamphlet printed 30 years ago entitled; “How Young Millionaires Trade Commodities” and virtually all the principles still apply. Supply and demand still rule the roost in determining pricing in commodities. Over the years the dynamics have certainly changed, but what hasn’t is human behavior, and the effects of greed and fear in the trading community. That is why principles that worked 3 decades ago still apply in today’s market.
1. Use money you can afford to lose – always trade with risk capital
2. Know yourself– be disciplined, always controlling your emotions
3. Start small – do not over commit until you learn the mechanics
4. Don’t over commit – always keep excess margin in your account
5. Isolate your trading from your desire for profit – try to eliminate “hope” from your trading plan

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6. Don’t form new opinions during trading hours – do not let day to day fluctuations change your overall plan
7. Take a trading break– trading everyday may cloud your judgment
8. Don’t follow the crowd– if everyone is leaning one way it is most likely the wrong way
9. Block out other opinions – do not be influenced by others once you form an opinion
10. When you’re not sure, stand aside– it is ok to be in cash and not in the market
11. Try to avoid market orders– always using market orders to buy and sell shows a lack of discipline
12. Trade the most active option month – look for where the open interest and liquidity exists
13. Trade divergence between related commodities – large divergences within the same sector generally present an opportunity
14. Don’t trade too many commodities at once – following several markets at once is difficult and usually costly
15. Trade the opening range breakout – breaking out of the opening range generally sets the tone for the direction of the coming move
16. Trade the breakout of the previous day’s range– this helps getting in and out of positions
17. Trade the breakout of the weekly range – again like the daily breakouts use breakouts as buy and sell signals
18. Trade the breakout of the monthly range – the longer time frame the more market momentum behind your trading decision
19. Build a trading pyramid – when adding to a position add fewer contracts than your base commitment
20. Never put your entire position on at one price – let the market prove you are right

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By: Matthew Bradbard