Sucessful Trading Rules

Discussion in 'Trading' started by Wiseowltx, Sep 1, 2007.

  1. Of course one should write the rules down and follow them with careful discipline.

    And, each trader is different as his comfort level with risk and knowledge of market varies...

    I am going to share the generics for critical feedback from the forum.....

    A) Market tops are determined by greed and market bottoms with fear. And a lot of volume of trading.

    B) Stocks with growing earnings (long) or stocks priced to perfection (short)

    C) Take losses when small and let profits grow...

    D) Be humble as market is a changing and same things will not work for long...

    Need additional rules...
  2. mauzj


    When in trouble double.

    there's always someone smarted than you

    there's always someone more stupid than you.
  3. mde2004


    Rule 1: I prefer to cut winners short and let losers go.

    Rule 2: Throw risk management out the window and trade size.
  4. :p
  5. You've posted aphorisms. You talk about rules. Pithy sayings are not the rules used by consistently successful traders. Back to square 1.
  6. Golly, Mr. Tiddlywinks is tuff, isn't he?:D

    Well, he right. Focus and refine your rules. You'll have about ten drafts before your on the right path.

  7. And by the time you have your rules finally nailed down, you will not really be much closer to success. Most leveraged traders fail, miserably.

    Regardless of what many say, the key to trading success is one thing: a clear edge, and ability to outperform on a regular, longterm basis. That is not dependent on tricks or witty sayings.

    Find yourself a mentor, spend a LOT of screen time learning to read price action, avoid some of the anointed gurus (WizeTrade, whatever), etc. If they want your money but are unwilling to show you a verifiable longterm track record, they are little more than hot air.

    All the feel-good psychology, books, and money management in the world won't overcome the house odds...
  8. Here are my newbie personal trading/investing rules...
    (I am primarily a long term investor, diversifying with position and swing trading strategies.

    Personal trading rules
    (Dynamic list: continually updated dependant on trading style and experience gained)

    1. Trade with the trend: market, sector and stock
    2. Reject buy/sell signals if not consistent with other trends
    a. Reject bullish buy/put signals/bearish trend – bearish sell/put signals/bullish trend
    3. Buy calls on uptrending stocks (index, sector…)
    4. Buy puts on downtrending stocks (index, sector…)
    5. keep losses small
    6. always have a stop-loss, preferable mechanical trailing stop
    7. never lower a stop in a long position, or raise a stop in a short position
    8. place the stop simultaneous to the trade
    9. never trade a dip without conducting research
    10. be aware of upcoming announcements
    11. review positions nightly
    12. maintain trading log, review often, learn from mistakes
    13. trade the facts, remove emotion
    14. always use trading plan, know the entry and exit points
    15. Paper trade until consistently profitable before risking real money.
    16. 80% of portfolio conservative investments, index’s, bonds, trust deeds etc (with stop-loss)
    17. never more than 20% of portfolio for aggressive investments/trades
    18. trading account not to exceed 10% of total portfolio
    19. initial trading account not to exceed $50,000 during first 6-months, $100,000 after year one, $200,000 after year three
    20. Become proficient in current strategies before adding strategies
    --- a. initially trade index’s, then sectors, then stocks
    --- b. initial option’s covered calls, then calls, then puts
    --- c. keep it simple
    --- d. use price action and volume as primary determination
    --- e. use basic combination trend indicator/oscillator for confirmation only
    --- f. go for sweet spot, wait for confirmation, do not attempt to time the tops and bottoms
    21. Base hits – not home runs
    22. Do not over trade, be patient, wait for opportunities
    23. be consistent/disciplined
    24. never add to a losing position
    25. Only trade long positions with strong fundamentals / short positions with weak fundamentals
    26. Back test all new trading plans and strategies (1-2-3-5 year periods)
    27. Paper trade all new strategies prior to investing
    28. never risk more than 1-2% of account on any single trade
    29. never invest more than 20% of account on any single trade
    30. be humble - on every trade there exists a more experienced trader on other side
    31. do not become complacent
    32. continue learning
    33. If not 110% confident in trade, sit-out
    34. Never risk monies which can not afford to be lost.. i.e. rent, food or other obligations
    35. College/retirement fund’s to remain in conservative accounts
    36. Pay self first 20% of earnings may be spent on discretionary items. Family fund.
    37. Allocate 30% of earnings for taxes
    38. Minimum of 50% of trading net earnings to be re-invested
    39. Minimum of 75% of investment net earnings to be re-invested
  9. Too many noob posts asking dumb questions

    You don't need a lot of rules to make a lot money in the markets.

    All you need to do is find a method that works.

  10. I just love these posts that make it all look so easy- "you just need to find a method that works"...REALLY?! man thanks for letting us know, we were sure we need to find a method that doesn't work...

    As for rules, I only have one which I try and follow, during trading and as a guideline for a happy life:

    "it's better to regret something you did, than something you didn't do"

    Cheers, and good luck trading
    #10     Sep 3, 2007