Any area of study has laws. What are the natural laws of trading? I suggest the laws be numbered to support ease of reference and discussion.
1. For every sale there is a buyer and seller who agree on price. 2. For every sale there is a buyer and seller who disagree on future price. :eek:
3. Murphy's law "Anything that can go wrong, will go wrong" http://en.wikipedia.org/wiki/Murphy's_law Q Murphy's Laws in the Stock Markets http://www.greekshares.com/murphy's_laws.asp Developing Trading Strategies * Sometimes it takes several years to recognize the obvious. * The simpler it looks, the more problems it hides. Buying Stocks * If anything can go wrong, it will. * If anything can't go wrong, it will. * If you know something can go wrong, and take due precautions against it, something else will go wrong. * You will never run out of things that can go wrong. * Failure is the opportunity to begin again more intelligently. * The less you do, the less can go wrong. * You can never tell which way the train will go by looking at the track. * Always assume that your assumption is invalid. Selling Stocks * You never know how soon it is too late. * When things go wrong, don't go with them. * If you are in a hole, stop digging. Following Trading Strategies * Being punctual means only that your mistake will be made on time. * A good place to start from is where you are. * To learn from you mistakes, you must realize that you are making mistakes. * Experience is what causes you to make new mistakes instead of old ones. * The best defense against logic is ignorance. * If you enjoy what you are doing, you are probably wrong. About Diversification * Things go wrong all at once, but things go right gradually. Customer Service of Financial Sites * If you don't know the answer, someone will ask the question. * You don't have to explain something you never said. * If you want to make enemies, try to change something. * Be kind to everyone you talk with. You never know who's going to be on the jury. * Never be too right too often. * The only changes that are easily adopted are changes for the worse. * The less you have to do, the slower you do it. * Always do exactly what your boss would do if he knew what he was talking about. * The e-mail never comes when you have nothing to do. * The less you say, the less you have to retract. UQ Q Murphy's Law for Commodity Traders http://www.smallgrains.org/Springwh/jun98/rambling.htm For every expert who says prices are going up, there is one who says they are going down. Everyone has a trading strategy that won't work. If you can drink it, don't trade it. The market is not logical; it is psychological. The successful speculator is one who dies before his time comes. If you drop a dead cat far enough, it will bounce. The market goes your way the day after your stop was hit. The big move begins the day after your option expires. He who sells uncovered options goes broke. If you feel like doubling up a profitable position, slam your dialing finger in the drawer until the feeling goes away. The perfect strategy works every time until you start using it. If your strategy seems to be working well, you haven't been using it long enough. The guy who owns the horse when it dies is the loser. When it comes to luck or skill, you can't beat luck. Pigs won't eat $5 corn or $500 meal. When the plate of cookies goes around the table, don't forget to take a couple. When the market is wrong, it doesn't pay to be right. He who sells what isn't his'n, pays the price or goes to prison. Be right; sit tight. The best way to make a small fortune is to start with a large one. He who knows doesn't tell, he who tells doesn't know. When you're hot, when you're not, take a vacation. The market knows more than the sum total of everyone in it. What everyone knows ain't worth knowing. The market will do whatever is necessary to fool the majority. Fundamentals are seldom what they appear to be. If you always do what you've always done, you'll always get what you've always got. The first five letters of "broker" spell "broke." The market punishes those who make mistakes. UQ
NoDoji's First Law of Trend Fighting: The price at which you would place an absolute disaster stop when trading against a strong trend is the price at which you will be stopped out just before a significant correction ensues.
Historical price patterns work because human nature does not change and neither does the law of supply and demand.
Trading is simple, but not easy. Anything works (Fibs, Stochs, Price Action, Waves, Volume, etc) but you have to have discovered it, backtested it and need to have 100% confidence in your method. The sooner you realize your mind is the steepest obstacle you need to scale, the quicker you'll be on your way to profitable trading. The day you have no attachment to your profits or losses, that's the day, you would have made it.
that's the day you are DEAD.. natural law: http://en.wikipedia.org/wiki/Natural_law quite a broad subject by the way..