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- On Hope and Rumour
- Never trade on hope, rumour or newsletter recommendation.
- Instead, act on your own judgment with strong backup from charts
& fundamental.
- Before Entering a trade
- Go through a mental rehearsal to visualize the trade, with
meditation if necessary.
- Understand the big picture and trade with the trend.
- Establish a risk / reward ratio, with at least 1 to 3 for
achievement
- Vividly imagine where the stop and the profit target is, and write
them out in a trade plan.
- In a Trade
- After entering a trade, stick on the trade plan with a stop loss,
and the subsequent trailing stops
- Never cancel a stop or move it backward
- Do not overtrade, invert pyramid or downward averaging.
- Do not hold more than 4 counters/ contracts at any one time.
- After Exit a Trade
- Once exit a trade, do not check back on the price movement for the
next two days
- Instead, analyze the trade thoroughly to see what are the mistakes
you have make and make sure it will not happen again.
- Complete the trade plan with comments and file them for future
reference
- Contra Trade
- For contra trades, if by the 3rd day it's still not making profit, just get out at a
small loss, even though your stop may not have been triggered.
- Remember, a good trade is profitable right from the start and need
not depend on hope.
- Cut Loss Fast and Let Profit Run
- Learn to take your losses quickly and cleanly.
- If you don't expect to be right all the time, and always prepare
for the worst, it will made it easier to cut loss promptly. Remember, Fool can take profit
, but Wise Traders know when to take losses.
- Also, never let a profit turn into a loss.
- Expect Some Losses After a Winning Streak
- Decrease your trading amount after a series of success, so
as to preserve your winning capital
- Against All Odds
- Whatever is hard to do in the market, is generally the right thing
to do.
- In Doubt
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