#5
last and enough (or maybe too much)
RISK MANAGEMENT - MONEY MANAGEMENT
If you don't bet, you can't win. If you lose all of your chips you can't bet again.
The three most important things for good trading are; Risk Control, risk control, and risk control.
Never risk more than 5% of your money on any one idea.
The most important.
WHEN TO BUY
Stick to your game plan for a particular trade and avoid impulsive trading decisions.
The best trades are the ones that have everything going for
them; fundamentals, technicals, and market tone (direction)).
DON'T OVERTRADE
Don't make too many trades.
Frequent trading is more entertainment than profitable.
Don't take on positions that are too big.
Take on the "right sized position", don't get greedy.
WHEN TO SELL
Cut losses, ride winners.
Let your profits run; cut your losses short and fast
The Three Elements of Good Trading: Cut losses, cut losses, and cut losses.
If unsure, sell.
If in doubt, sell.
If confused, sell.
If something feels wrong right after you buy, don't be embarrassed to change your mind and get right out.
It's ok to make frequent small mistakes.
STOPS, PRICE TARGETS
Good traders anticipate the sale before they make the buy.
Always use stops; would you drive a car without breaks?
Always use stops. Protects your capital and commits you to take the right action, without emotion.
Have a predetermined stop price before you enter a position.
Set your stop as soon as the trade is entered.
For short term trades, place your stops close.
For long term trades place your stops further away. .Place your stops close on a big trade.
Place the stop further away for a small trade.
Always pick a point at which you want to get out, before you get in
Know where you will get out before you get in.
Think through a trade before you make it, have a target objective, and determine a stop price.
Use both a price stop and a time stop. If you thought that a move would take place in a certain time frame, and it does not, sell.
WHEN TO AVERAGE DOWN
Never
Never
WHEN TO BUY A STOCK THAT IS FALLING
Never
Never
ON TRYING TO PICK BOTTOMS OR TOPS.
Don't try. No one can do it consistently.
TECHNICAL ANALYSIS
Can often clarify the fundamental picture.
Technical analysis can often clarify the fundamental picture.
T/A is like a thermometer, use it; you want to know everything you can
to have an edge on the market.
T/A reflects the vote of the entire marketplace"
FUNDAMENTAL ANALYSIS
Fundamental analysis tells us what to buy. Technical analysis tells us
when to buy and at what price.
F/A tells us if there will be anything left to sell"
WHAT TO DO IF YOU ARE TRADING POORLY; on a losing streak?
Decrease your trades.
Reduce your positions until you are back on track again.
Cut back.
Cut back or stop for a while to get mental clarity.
THE MARKET IS ALWAYS RIGHT
Believe the market, it is bigger than you.
Take a market view, try to know why the market "should" move in a certain way. If it goes in a different direction, try to understand why. If you can't figure it out, stop trading.
NEWS
If a stock does not respond to news "the way it should", be careful. There is an important message being sent.
4f the news is wonderful and the stock does not go up, sell or go short.
EMOTIONS
Stay rational and disciplined, especially under pressure.
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