(Source : http://www.tischendorf.com/2009/12/...e-50-time-tested-classic-stock-trading-rules/) 1. Plan your trades. Trade your plan. 2. Keep records of your trading results. 3. Keep a positive attitude, no matter how much you lose. 4. Don’t take the market home. 5. Continually set higher trading goals. 6. Successful traders buy into bad news and sell into good news. 7. Successful traders are not afraid to buy high and sell low. 8. Successful traders have a well-scheduled planned time for studying the markets. 9. Successful traders isolate themselves from the opinions of others. 10. Continually strive for patience, perseverance, determination, and rational action. 11. Limit your losses – use stops! 12. Never cancel a stop loss order after you have placed it! 13. Place the stop at the time you make your trade. 14. Never get into the market because you are anxious because of waiting. 15. Avoid getting in or out of the market too often. 16. Losses make the trader studious – not profits. Take advantage of every loss to improve your knowledge of market action. 17. The most difficult task in speculation is not prediction but self-control. Successful trading is difficult and frustrating. You are the most important element in the equation for success. 18. Always discipline yourself by following a pre-determined set of rules. 19. Remember that a bear market will give back in one month what a bull market has taken three months to build. 20. Don’t ever allow a big winning trade to turn into a loser. Stop yourself out if the market moves against you 20% from your peak profit point. 21. You must have a program, you must know your program, and you must follow your program. 22. Expect and accept losses gracefully. Those who brood over losses always miss the next opportunity, which more than likely will be profitable. 23. Split your profits right down the middle and never risk more than 50% of them again in the market. 24. The key to successful trading is knowing yourself and your stress point. 25. The difference between winners and losers isn’t so much native ability as it is discipline exercised in avoiding mistakes. 26. In trading as in fencing there are the quick and the dead. 27. Speech may be silver but silence is golden. Traders with the golden touch do not talk about their success. 28. Dream big dreams and think tall. Very few people set goals too high. A man becomes what he thinks about all day long. 29. Accept failure as a step towards victory. 30. Have you taken a loss? Forget it quickly. Have you taken a profit? Forget it even quicker! Don’t let ego and greed inhibit clear thinking and hard work. 31. One cannot do anything about yesterday. When one door closes, another door opens. The greater opportunity always lies through the open door. 32. The deepest secret for the trader is to subordinate his will to the will of the market. The market is truth as it reflects all forces that bear upon it. As long as he recognizes this he is safe. When he ignores this, he is lost and doomed. 33. It’s much easier to put on a trade than to take it off. 34. If a market doesn’t do what you think it should do, get out. 35. Beware of large positions that can control your emotions. Don’t be overly aggressive with the market. Treat it gently by allowing your equity to grow steadily rather than in bursts. 36. Never add to a losing position. 37. Beware of trying to pick tops or bottoms. 38. You must believe in yourself and your judgement if you expect to make a living at this game. 39. In a narrow market there is no sense in trying to anticipate what the next big movement is going to be – up or down. 40. A loss never bothers me after I take it. I forget it overnight. But being wrong and not taking the loss – that is what does the damage to the pocket book and to the soul. 41. Never volunteer advice and never brag of your winnings. 42. Of all speculative blunders, there are few greater than selling what shows a profit and keeping what shows a loss. 43. Standing aside is a position. 44. It is better to be more interested in the market’s reaction to new information than in the piece of news itself. 45. If you don’t know who you are, the markets are an expensive place to find out. 46. In the world of money, which is a world shaped by human behavior, nobody has the foggiest notion of what will happen in the future. Mark that word – Nobody! Thus the successful trader does not base moves on what supposedly will happen but reacts instead to what does happen. 47. Except in unusual circumstances, get in the habit of taking your profit too soon. Don’t torment yourself if a trade continues winning without you. Chances are it won’t continue long. If it does, console yourself by thinking of all the times when liquidating early reserved gains that you would have otherwise lost. 48. When the ship starts to sink, don’t pray – jump! 49. Lose your opinion – not your money. 50. Assimilate into your very bones a set of trading rules that works for you.
Priceless. I always emphasize this, but the paper warriors still think they're gonna make it without putting their skin in the game. This industry is littered with fearful paper warriors. You need a brain, money, and big balls, and you have to walk forward a little before you can retrace your steps. I started as a degenerate gambler. If you don't have the propensity to gamble, you are destined to fail.
Above all, know your market sentiment. Knowing the market sentiment is foremost important- whether it's going through bullish/bearish sentiment. You long when market is in bearish, you'll screw up. You short when market is in bullish, you'll screw up. Trading is not different from a relationship. When your girlfriend is not in good mood (e.g. bearish sentiment), and you don't care ( e.g. initiate long positions), you'll screw up the relationship (will hurt your account balance).
Ah, I agree...the bottom line...the $500,000 question. Before every market open of every trading day...I make that decision. ...each day is a different combination of being right and/or managing that trade in the heat of the battle.
Sorry to bust your bubble, to do very well "You long when market is in bearish" and "You short when market is in bullish". The more emotions that people have for their positions, the closer to the end. Most of the time when markets are going up, people are saying "we still in bear market" and when market going down they are saying "it is just a retracement", only when 65% of the market has trended people will get tired of losing and jump on board. Trading is not about making money first, it is about ways to control risk, you don't figure way to control risk, you are delusional on thinking you are going to beat the market or professionals.
First and I don't recommend to most, but I don't use protective stops when I day trade, too cumbersome and I don't want to cause my own slippage. BUT so many put in their stops, and like deer in headlights or they just plain stupid or something, they sit there waiting to be stopped out. They don't learn to read what the charts are yelling out. I think many would be better off putting in a catastrophic protective stop, put it 50% further out BUT learn to read charts better, it not hard especially if you wanting to make this a living. Like in the ES, you are short, and you start seeing lows within 2 ticks of each other, it is forming support, good time to take profit. If the market is screaming up and in 2-3 bars it has tripled the range of last 30 minutes, time to take profit, what goes fast in one direction, guess what? More likely to come back almost as fast, so find the highest low to sell under. Price ran up on some kind of news, Buy the rumor and sell the fact, ever hear that? But so many just say "I have my stops in", you get lazy, very lazy when you think in that way. Hey it is the weekend and I started early back testing, I love back testing much more than trading. Trading is just end product of what I have formed in back testing stages, better you back test, the end product should be that better as well.
I really half to say I don't believe in over half these rules, in my youth this is the crap I read, but real life and making account grow, you have to toss away 50% of them, this is where many who write books fail as many can't trade well. I mean, who has time to write books and books. Ever watch someone who gambles for a living in Video poker? They are good, 500 hands an hour, know exactly what to keep in hopes of making the Royal Flush at 4800 to 1, and each hand they are making points of their card that is in the machine. I have a friend who does this, she hits 4-6 Royals a year, wins at least 2 cars a year-(takes the money instead), casinos pay for so many freebies, she could eat free 10 times a day, points on the card she gets free airline tickets, stays at finer hotels, vacations around the world or she can auction off what she wins on ebay. But she has fine technique, she knows the odds, and a day trader has to be the same way, knowing what the odds are as the chart presents itself, you are not memorizing 50 rules, you are doing as if by rote of same moves of video player, it is a hard way of life at some point cause doing the same thing, it does become like a job at times, boring, but boring is good so long as you don't make it exciting by taking non system trades. Like the first eight rules, I don't believe at all.... I believe in 2nd part of #1, I trade my plan, but I don't plan my trades, the market makes them and I react. The Planning was done in the Trading Plan.
I have learned I can have normal life even if I have 23 losing trades for long term commodities. But playing video poker, you have to be a Sadist, cause you might go months of losing, ten months she said once and then in 3 days of hitting Royal flushes she makes up all the losing and pockets $110k. Not for me, I couldn't handle all the losing. And she thinks what I do is insane....