10 Trading Commandments

Discussion in 'Trading' started by fxpeculator, Feb 2, 2006.

Detached Traders 10 Trading Commandments

  1. He is right on!

    6 vote(s)
  2. I would change it up a bit

    5 vote(s)
  3. I am putting down my own

    2 vote(s)
  4. This is a good idea for all traders, to develop their own or adopt some

    5 vote(s)
  5. This is basic stuff, couldn't help a novice using 400-1 leverage on a 2K account

    5 vote(s)
  1. This guy posted his 10 commandments for trading. Wanted to see how other traders would go about it. Either endorsing this guys commandments, changing it a little, or sharing your own. This guy calls himself "The Detached Trader" lol

    1. Stay disciplined and calm under pressure.
    2. Be flexible and open-minded.
    3. Honor fundamental and technical analysis and keep them both Holy.
    4. Be and stay emotionally detached and objective at all times, never fall in love with a trade or idea.
    5. Be patient, wait for optimal trades.
    6. Think and trade with a Big Institution mindset. Where is the big money going?
    7. Think independently and develop a contrarian framework, there is “dumb money” and “smart money” put on each trade.
    8. Don’t personalize your losses.
    9. Don’t try to fight the market and “win” your money back.
    10. Expand your knowledge of various financial markets including stocks, commodities, and currencies so one day you will be able to go wherever the “trendy” action and optimal risk reward profile is. Develop a firm understanding of the interrelatedness of the global markets and nurture your “Macro” edge

    here is a link to his site: http://detachedtrader.com/
  2. Another brand of trading commandments from The Big Picture site:


    The Ten Trading Commandments
    in Psychology/Sentiment | Trading

    Ok, enough real estate for a given weekend (or lifetime) -- we now return to our originally scheduled programming:

    I seem to have fallen into the habit of posting a list of "trading rules" from different sources on Sundays. I like the rhythm of that, and I expect this will be a regular feature.

    Despite our RE fest, today is no different: These rules come from Todd Harrison. I credit Toddo as bing the first true market/stock related blogger (more on this later) when he was writing the Trading Diary for TheStreet.com. Todd was previously Jim Cramer's head trader at Cramer Berkowitz, and has an excellent feel for market conditions.

    He now runs an edu-tainment market site called Minyanville. His 10 trading rules are straightforward and uncommonly common sensical:

    With the red seas yesterday, I thought it might be helpful to walk through my ten trading commandments:

    Respect the price action but never defer to it.
    The action is an important element when trading but if you defer to the flickering ticks, stocks would be “better” up and “worse” down—and that’s a losing proposition.

    Discipline trumps conviction.
    No matter how strongly you feel on a given position, you must defer to the principles of discipline when trading. It will differentiate your performance over the course of time.

    Opportunities are made up easier than losses.
    It’s not necessary to play every move, it’s only necessary to have a high winning percentage on the trades you choose to make.

    Emotion is the enemy when trading.
    Emotional decisions always have a way of coming back to haunt you. It’s that simple.

    Zig when others Zag
    Sell hope and buy despair. In other words, take the other side of emotional disconnects in the market.

    Adapt your style to the market
    At various junctures, different approaches to the market are warranted. Applying the right trading methodology is half the battle.

    Maximize your reward relative to your risk
    If you’re patient and pick your spots, edges will emerge that provide a more advantageous risk/reward profile.

    Perception is reality in the marketplace.
    Identifying the prevalent psychology is a necessary process when trading. It’s not what is, it’s what’s perceived to be that matters.

    When unsure, trade “in between”
    Your risk profile should always be a reflection of your thought process. Take what the Minx will give you and don’t press.

    Don’t let your bad trades turn into investments.
    Rationalization has no place in trading. If you put a position on for a catalyst and it passes, take the trade—win or lose.

    There are obviously many more trading rules of thumb, but I’ve found these to be the most helpful. Each of you has a unique risk profile and time horizon, so some (or all) of these commandments may not apply. As always, my goal is to share my thoughts with the hopes that it adds value to your process. Find an approach that works for you and always allow for a margin of error. With a little luck and a lot of discipline, we’ll find our way to better times. Good luck today. R.P.
  3. http://www.edesks.com/default.aspx?PID=RULES

    Trading Rules

    The 10 Commandments of trading by Alexander Grace
    Stops are the key to success for many traders… limit your loses. Before entering a trade focus on how much you can lose not how much you can make. If you protect yourself you will be surprised by how far your profits run.
    We do not buy gap ups and we do not sell gaps down. Yes there are exceptions to every rule but we are interested in the highest probability.
    Remember all markets function the same the one driving factor is that human nature dictates price movement based on panic, fear, greed, insecurity, anxiety, stress and uncertainty. Think with the opposite side of your brain. Nothing is new in stocks. The game does not change and neither does human nature.
    Mark to market everyday. Know your capital every single day understand the amount of money in your account.
    Do not let the minute-to-minute or day-to-day swings change your conviction of where the market is going. Stick and stay to make it pay.
    Of all speculative blunders, there are few greater than selling what shows a profit and keeping what shows a loss. Sell your losers keep your winners its that simple.
    Be advised that it is better to be more interested in the market's reaction to new information than to be the piece of news itself. People who buy headlines eventually end up selling newspapers.
    Keep record of your trading results
    Take a trading break. A break will give you a detached view of the market and a fresh look at yourself and the way you want to trade for the next several weeks.
    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 it, he is lost.
  4. Helpful read /link with Jim Cramer Berkowitz trader,FXtrader

    Sounds like mr. Al Grace got one of his commandments from Edwin Lefevre,1923 pretty much word for word;
    that is, unless mr Grace is older than 1923.

    Samson Coslow, apparently his real name, has some more helpful 1933 stuff, amazing how up to date much but not all,
    of it is still up to date.[ Wall Steret Wisdom]

  5. Did you read the "Education of a Speculator" by Victor Niederhoffer? there you'll find a lot of quality feedback.

    Is my favorite book.
  6. http://www.meta-formula.com/Metastock-10-Commandments-of-Trading.html

    My Top 10 Rules are not a "Get Rich Quick" scheme. They are a set of guiding principles that will help you learn how to save, invest, prosper and to achieve your financial goals. I can not guarantee that they will make you a millionaire overnight but they will certainly help you to get started. Over time you will quickly see the benefits of these rules and your financial prosperity will grow... SIGNIFICANTLY !!!
    The principles used in my Top 10 Rules apply anywhere in the world for anyone that is eager to achieve financial independence and that wants to make good, honest money... a lot of good, honest money !!!

    So if you want to win, understand these rules.

    1) You cannot predict the future. Stop believing it and stop wasting your time trying to do it. No-one ever has nor ever will be able to "predict" what is going to happen in the future. Runaway markets tend to keep running away. Cheap stocks seem to get much cheaper and expensive stocks more often than not, get much more expensive. do not even bother trying to justify a market simply let it do what it wants to.

    2) The big money is made from position sizing. You really must stop chasing a holy Grail and spend time on different position sizing rules. This is the one "secret" that separates a professional from the man in the street. To discover my money management secrets click here.

    3) Price is all that matters. Stocks do not follow fundamentals. It's all about "perceptions." Why can two identical stocks have completely different fortunes in the market?

    4) Stop thinking like an institution. The big money management funds are not interested in outperforming the stock market. as strange as it seems they are interested in managing money. So when they tell you to "diversify", only invest in blue Chip stocks with a solid past earnings, great management teams, solid this and that.... treat it for the non-sense it is. Unless you want poor returns.

    5) 99% of technical analysis is junk. Whole companies have been set up to feed you B*S in the form of technical analysis. Throw it away and get down to basics.

    6) Question everything and everyone. Even me. Never blindly believe anything you read or hear about. Be careful about what you read and even more careful about what you believe in. after all an opinion is only some-ones belief.

    7) If you have to ask you shouldn't be in. I can't believe people actually ask other people whether they should hold or sell a stock position they are in. Surely before you enter you have your exits all in place. I'll guarantee if you are asking this question you are not making money.

    8) I am in the stock market to make money not to win a puzzle. No-one can beat the market. Make a fortune in a bull market play defensive in a bear market. Returns of 300%+ should be easily attainable in the right conditions but do not give it back when the market conditions change.

    9) Some people are just not cut out to trade the stock market. If you attach too much importance to your trading account i.e you are trading "scared money" you will never have the conviction to follow your rules. If you are not having success stop trading. either learn why you are failing or give your money to someone who is.

    10) Trading the stock market isn't everything. It's only money. there are much more important things in life & you'd better not forget it.

    These commandments aren't rocket science... however if you follow them you will be very successful, no matter what market you trade.