Time Tested Classic Trading Rules
for the Modern Trader to Live By
This is a
list of classic trading rules that was given to me while on the
trading floor in 1984. A senior trader collected these rules from
classic trading literature throughout the twentieth century. They
obviously withstand the age-old test of time.
I'm sure most
everybody knows these truisms in their hearts, but this list is
nicely edited and makes a good read.
Plan your
trades. Trade your plan.
Keep records
of your trading results.
Keep a
positive attitude, no matter how much you lose.
Don't take
the market home.
Continually
set higher trading goals.
Successful
traders buy into bad news and sell into good news.
Successful
traders are not afraid to buy high and sell low.
Successful
traders have a well-scheduled planned time for studying the
markets.
Successful
traders isolate themselves from the opinions of others.
Continually
strive for patience, perseverance, determination, and rational
action.
Limit your
losses - use stops!
Never cancel
a stop loss order after you have placed it!
Place the
stop at the time you make your trade.
Never get
into the market because you are anxious because of waiting.
Avoid getting
in or out of the market too often.
Losses make
the trader studious - not profits. Take advantage of every loss to
improve your knowledge of market action.
The most
difficult task in speculation is not prediction but self-control.
Successful trading is difficult and frustrating.
Youare the most important element in the equation
for success.
Always
discipline yourself by following a pre-determined set of
rules.
Remember that
a bear market will give back in one month what a bull market has
taken three months to build.
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.
You must have
a program, you must know your program, and you must follow your
program.
Expect and
accept losses gracefully. Those who brood over losses always miss
the next opportunity, which more than likely will be
profitable.
Split your
profits right down the middle and never risk more than 50% of them
again in the market.
The key to
successful trading is knowing yourself and your stress
point.
The
difference between winners and losers isn't so much native ability
as it is discipline exercised in avoiding mistakes.
In trading as
in fencing there are the quick and the dead.
Speech may be
silver but silence is golden. Traders with the golden touch do not
talk about their success.
Dream big
dreams and think tall. Very few people set goals too high. A man
becomes what he thinks about all day long.
Accept
failure as a step towards victory.
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.
One cannot do
anything about yesterday. When one door closes, another door opens.
The greater opportunity always lies through the open door.
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.
It's much
easier to put on a trade than to take it off.
If a market
doesn't do what you think it should do, get out.
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.
Never add to
a losing position.
Beware of
trying to pick tops or bottoms.
You must
believe in yourself and your judgement if you expect to make a
living at this game.
In a narrow
market there is no sense in trying to anticipate what the next big
movement is going to be - up or down.
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.
Never
volunteer advice and never brag of your winnings.
Of all
speculative blunders, there are few greater than selling what shows
a profit and keeping what shows a loss.
Standing
aside is a position.
It is better
to be more interested in the market's reaction to new information
than in the piece of news itself.
If you don't
know who you are, the markets are an expensive place to find
out.
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.
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.
When the ship
starts to sink, don't pray - jump!
Lose your
opinion - not your money.
Assimilate
into your very bones a set of trading rules that works for
you.
I think too many folks do not have an exit plan ready when the
enter a stock, then they enter a stock and then after several days
etc they try to decide where a stop should be. The trouble
with this is that it causes emotion to set in. You should
ALWAYS have your exit plan i.e stops and targets before you even
enter into a position.
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Time Tested Trading Rules
Posted by matt on 28th of Dec 2008 at 04:12 pm
Time Tested Classic Trading Rules
for the Modern Trader to Live By
This is a list of classic trading rules that was given to me while on the trading floor in 1984. A senior trader collected these rules from classic trading literature throughout the twentieth century. They obviously withstand the age-old test of time.
I'm sure most everybody knows these truisms in their hearts, but this list is nicely edited and makes a good read.
Trading Rules
Posted by winter39 on 30th of Dec 2008 at 07:58 am
Matt, Great set of rules. Could you repost in the weekend newsletter, so we can print it out. Thank you!
Title: Trading Rules Winter. You can
Posted by finam on 30th of Dec 2008 at 10:37 am
Winter. You can highlight this and copy it to Word then print it from t here. FinaM
Thats
Posted by ravun on 29th of Dec 2008 at 01:16 pm
Quite freaky..same set of rules posted on pg88 blog on the 23rd.
Just type in "something for all of us" in the search engine
I think too many folks
Posted by matt on 28th of Dec 2008 at 04:26 pm
I think too many folks do not have an exit plan ready when the enter a stock, then they enter a stock and then after several days etc they try to decide where a stop should be. The trouble with this is that it causes emotion to set in. You should ALWAYS have your exit plan i.e stops and targets before you even enter into a position.