Trading Wisdom

Trading Wisdom

 

• Buy from the scared, sell to the greedy.

• Buy their pain, not their gain.

• Successful traders are quick to change their minds and have little pride of opinion.

• I made my money because I always got out too soon. (Bernard Baruch)
• Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars. (Bernard Baruch)

• Throughout all my years of investing I’ve found that the big money was never made in the buying or the selling. The big money was made in the waiting. (Jesse Livermore)

• The faster a stock has climbed, the quicker it will fall.

• The more certain the crowd is, the surer it is to be wrong. (Menschel)

• Bear markets begin in good times. Bull markets begin in bad times
• Never confuse genius with a bull market.

• Always sell what shows you a loss and keep what shows you a profit

rules for trading

RULE 1 – Keep losses small. I am more concerned about protecting my capital and ensuring any losses are small, than I am about making money. I’m going to have losses, but I control them and let the winners take care of themselves. The hardest job of any trader is to get out of a losing trade, believe it. 

RULE 2 - Do not forget Rule 1.

 RULE 3 - Learn the basics; fundamentals, charts and indicators etc.

RULE 4 - Position size every bet in relation to your bank.

RULE 5 - Always use stops, not as a trading tool, but as a disaster avoidance technique.

RULE 6 - Give your trade room to breathe, don’t place stops too close, most beginners lose because of this. Remember, the wider the stop the smaller the trade size. This is also dependent on the timeframe you are in, simple tip if you are trading on the 5 min. chart. Check the 10 min one as well. Stops should be placed visually in my opinion.

RULE 7 - Don’t be greedy, appreciate small and consistent gains. Once you’re in a profitable position, consider moving your stops – especially to break even – and then you are using the broker’s money. If your software has the facility, then trailing stops could the answer.  

RULE 8 - Accept that the markets are totally random and unpredictable and practice makes perfect – give yourself time before trading ‘live’.

RULE 9 - Control REVENGE, after a loser take a break, always. Never strike right back, never, and never double up to recover your losses.

RULE 10 - Never HOPE that you will win, trade only when you see a good trading opportunity, and remember live trading is different mentally from demo trading.

RULE 11 - Keep accurate records of each and every trade, winners and losers, even on a demo account, you must learn the correct habits.

RULE 12 - Eliminate fear, fear of failure and fear of trading. If you suffer from fear then trading is not for you.

RULE 13 - You do not have to trade, if there are no good trading opportunities then do not trade, there is always tomorrow. You can always spend the time practicing new techniques on a demo account.

RULE 14 - Take full responsibility 100% for your own trading – only you can win at trading, do not rely on any external crutch to blame.

RULE 15 - All markets are bearish, they will eventually reverse, prepare and profit from them.

RULE 16 - If you lose, bet smaller. If you win, bet bigger.

TRADING RULES FOR TRADERS

• Devise a trading plan and follow it. I believe the best trading strategy is the one you’ve been able to review, back test and fits your trading style and risk tolerance. It is important that you know all vitals of the trade (the entries, possible exit targets, and where your stops may be prior to placing your trade orders.) By having a concrete plan, you assist in removing the emotion out of the equation.
• Stick with the trend!There’s a reason why the cliché “The trend is your friend” exists. It’s because it’s true! Successful traders will always tend to follow the trend when trading. Remember, if you trade with the trend, you have the majority of the market on your side.
• Control your emotions.This by far is the hardest thing for any trader to do. After all, it has been said that emotional control is 90‐95% of trading and the rest is your strategy. Therefore, I can’t say it enough times… Figure out a way to trade without emotions. To help with this matter, I believe it’s vital that you trade only with capital you can afford to lose. If you are using money that you need to pay your bills, you will almost certainly get emotional about every trade you make. In addition, I found that the more confident you are about your trading strategy, the better the chances are that you can trade with little emotional stress.
• Record your trades in a trade journal.When I first started trading, I was a bit lax about this concept. But once I started doing recording my actions, I found that I was able to identify my strengths and weaknesses. I take about 30‐45 minutes each day after I’m finished trading for the day to review my trades and to analyze any disconnect from my original plan. This helps me strengthen my conviction of my plan.
• Never trade unless the signal is clear.There are times when the market can confuse you. For me, confusion is a clear cut signal to keep out of the market. I always want my trades to be high probability signals. My signal has generated a winning percentage of more than 70%. So if I’m uncertain about a signal why would I want to take it, knowing that the chance of it winning is more like a coin toss or less? To me, that is gambling… and I do not consider myself a gambler.
• Never make trades because you are bored. Sitting on the sidelines waiting for your next trade signal to line up can be very unsettling. Many traders have learned that trading out of boredom can blow out your account in a hurry. For me, trading out of boredom while failing to follow your trading signal is gambling.

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