10. Never, ever under any condition, add to a losing trade, or "average" into a position. If you are buying, then each new buy price must be higher than the previous buy price. If you are selling, then each new selling price must be lower. This rule is to be adhered to without question.
That's a golden rule. My experience is "average down" doen a lot more harm than benifit. Old saying "don't catch a falling knife".
11. Do more of what is working for you, and less of what's not. Each day, look at the various positions you are holding, and try to add to the trade that has the most profit while subtracting from that trade that is either unprofitable or is showing the smallest profit. This is the basis of the old adage, "let your profits run."
Agreed in general, but Marekt is changing, and survivor has to learn adapt. many examples, in 2000 tech bubbles, lots of pros made millions evevry year, but many lost all before 2002. Marekt has changed, those who didn't adapt weer eliminated.
12. Don't trade until the technicals and the fundamentals both agree. This rule makes pure technicians cringe. I don't care! I will not trade until I am sure that the simple technical rules I follow, and my fundamental analysis, are running in tandem. Then I can act with authority, and with certainty, and patiently sit tight.
I don't read fundamental anymore. No commenst on this one.
13. When sharp losses in equity are experienced, take time off. Close all trades and stop trading for several days. The mind can play games with itself following sharp, quick losses. The urge "to get the money back" is extreme, and should not be given in to.
Hope those time don't happen often. If do, better just quit trading.
14. When trading well, trade somewhat larger. We all experience those incredible periods of time when all of our trades are profitable. When that happens, trade aggressively and trade larger. We must make our proverbial "hay" when the sun does shine.
15. When adding to a trade, add only 1/4 to 1/2 as much as currently held. That is, if you are holding 400 shares of a stock, at the next point at which to add, add no more than 100 or 200 shares. That moves the average price of your holdings less than half of the distance moved, thus allowing you to sit through 50% corrections without touching your average price.
That's wise.
16. Think like a guerrilla warrior. We wish to fight on the side of the market that is winning, not wasting our time and capital on futile efforts to gain fame by buying the lows or selling the highs of some market movement. Our duty is to earn profits by fighting alongside the winning forces. If neither side is winning, then we don't need to fight at all.
"If you can not make the market, then just go with the market". Staying on the right side does not give you a 100% run, but it does ensure you to make profit more frequently than losing money.
17. Markets form their tops in violence; markets form their lows in quiet conditions.
No so true. I have amble evidence to show that bottom can be violent as well, and top can also be flat.
18. The final 10% of the time of a bull run will usually encompass 50% or more of the price movement. Thus, the first 50% of the price movement will take 90% of the time and will require the most backing and filling and will be far more difficult to trade than the last 50%.
No so true.
Again, trading is not a science, it is art. You can't just go with rules. A man without creativity will never succeed in trading. If rules can do it all for us, the best trader would be a robot.
That's a golden rule. My experience is "average down" doen a lot more harm than benifit. Old saying "don't catch a falling knife".
11. Do more of what is working for you, and less of what's not. Each day, look at the various positions you are holding, and try to add to the trade that has the most profit while subtracting from that trade that is either unprofitable or is showing the smallest profit. This is the basis of the old adage, "let your profits run."
Agreed in general, but Marekt is changing, and survivor has to learn adapt. many examples, in 2000 tech bubbles, lots of pros made millions evevry year, but many lost all before 2002. Marekt has changed, those who didn't adapt weer eliminated.
12. Don't trade until the technicals and the fundamentals both agree. This rule makes pure technicians cringe. I don't care! I will not trade until I am sure that the simple technical rules I follow, and my fundamental analysis, are running in tandem. Then I can act with authority, and with certainty, and patiently sit tight.
I don't read fundamental anymore. No commenst on this one.
13. When sharp losses in equity are experienced, take time off. Close all trades and stop trading for several days. The mind can play games with itself following sharp, quick losses. The urge "to get the money back" is extreme, and should not be given in to.
Hope those time don't happen often. If do, better just quit trading.
14. When trading well, trade somewhat larger. We all experience those incredible periods of time when all of our trades are profitable. When that happens, trade aggressively and trade larger. We must make our proverbial "hay" when the sun does shine.
15. When adding to a trade, add only 1/4 to 1/2 as much as currently held. That is, if you are holding 400 shares of a stock, at the next point at which to add, add no more than 100 or 200 shares. That moves the average price of your holdings less than half of the distance moved, thus allowing you to sit through 50% corrections without touching your average price.
That's wise.
16. Think like a guerrilla warrior. We wish to fight on the side of the market that is winning, not wasting our time and capital on futile efforts to gain fame by buying the lows or selling the highs of some market movement. Our duty is to earn profits by fighting alongside the winning forces. If neither side is winning, then we don't need to fight at all.
"If you can not make the market, then just go with the market". Staying on the right side does not give you a 100% run, but it does ensure you to make profit more frequently than losing money.
17. Markets form their tops in violence; markets form their lows in quiet conditions.
No so true. I have amble evidence to show that bottom can be violent as well, and top can also be flat.
18. The final 10% of the time of a bull run will usually encompass 50% or more of the price movement. Thus, the first 50% of the price movement will take 90% of the time and will require the most backing and filling and will be far more difficult to trade than the last 50%.
No so true.
Again, trading is not a science, it is art. You can't just go with rules. A man without creativity will never succeed in trading. If rules can do it all for us, the best trader would be a robot.
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