As with any strategy, rules need to be incorporated into your trading plan, and followed objectively to ensure long-term consistency and success. The following rules are written for this particular strategy, though can be easily be incorporated into other strategies, as well. They are simple, and should be followed explicitly.
Never break the rules. The first rule for a good reason.
Never enter a trade late. Entering a trade late removes the buffer zone required to get out of the position with little or no loss if price turns against your position. If you miss the level, so be it. On to the next.
Risk/reward ratio must be assigned and followed. With a 1:3 risk/reward ratio (risking 10,000 to get 30,000), the trader only has to win 3 out of 10 trades in order to turn a profit. That’s it. When these rules become skewed, so does your account, and usually not in a good way.
Assign a fixed stop loss, regardless of the scenario
Watch out for news releases. Nothing blasts away hard support and resistance faster than unexpected economic news. We will admit that these levels do hold, even during news releases, but probability declines dramatically. We have certain strategies for trading news releases in line with using these levels, though they are learned over time and take a good amount of experience. For newer traders, we suggest staying away from the news completely.
Watch out for severe market runs. We're talking about option barriers being demolished, interest rate rumors running through the market, or the last day of the month. These times in particular, more than any others, are days when the market tends to run dramatically, and steady trends develop toward certain price magnets.
Take profits. Although it might seem like an easy things to do, but one of the biggest issues for many traders is failure to take profits, and then seeing the position run against him/her. Securing profits at opposing key levels locks in your position and keeps the roof over your head.
Wait for the setup / do not enter on weak or unobvious levels. It’s better to not trade at all than take a bundle of trades that provide little probability of success. There is no reason to lose if you don’t have to. Tomorrow is another day.
Keep it simple. There is no need to overcomplicate, or flood your trading decisions with weak information that could potentially paralyze you from pulling the trigger.