“I try not to go against the moving averages; it is self-destructive.” This is something that can cause a lot of losses for traders that fight a trend. Regardless of other technical indicators the moving average tells the trend. “Before putting on a position always ask, ‘Do I really want to have this position?’” There is no need to rush into any position, wait for your signal. Rushing into a position and chasing a stock is one of the main reasons that traders lose money. Follow your trading plan not your emotions and impulses. “After a successful period, take a day off as a reward.” While this applies more to discretionary day traders that trade with a lot of financial and emotional heat. I do think it is crucial that traders relax and take time enjoy their great trades and winning streaks. Enjoy your weekends after a great trading week. “My biggest losses have always followed my largest profits.” This is a caution against getting a big ego after a big winning trade. New traders tend to trade too big and go off their trading plan when they feel like they can not lose. “Bottom fishing is one of the most expensive forms of gambling.” Catching falling knives just tends to cause a trader to lose money not catch a bottom. Most traders just lose money fighting a trend. “Before taking a position, always know the amount you are willing to lose.” Every entry you make must also have a stop loss exit plan that you will take if proven wrong. You have to accept the amount of money you are willing to lose before you enter any trade. Almost every single trader profiled in Market Wizards insists that risk control is an absolute necessity.
These quotes would be shared by all seasoned traders, it is experience talking. To add: Be cautious around announcements. Thanks for posting
I am ALWAYS OUT when major news is released (trading the 6E). I love watching the news releases but it is just gambling to have a position on. Even if you bracket the price there is huge risk.
Great thread. Marty Schwartz is a great guy to follow/listen to. Anyone who trades futures and hasn't read his book should. Great book. To add what Wartrace said, I couldn't agree more. It always amazes me when guys put on day trades right before big reports....EIA in Crude.....Monthly Crop reports in Ag Futures.....Bond positions right before an 8:30 economic release. There is absolutely no skill involved in that trade.
You did mean to say "If the maximum amount you are willing to lose is 100%, you are just gambling." right? I don't gamble, I trade. I am NEVER 'willing" to lose 100%. I never enter a trade in which there is a chance of losing everything.
Bull. I analyzed my performance and good results are usually followed by more good results, markets can be erratic or sensical, it usually comes and goes in waves.
Pit Bull was an important book for me. It is not a how to trade book, but Schwartz has great insight.
I agree People shouldn't necessarily take these so-called trading 'commandments' so seriously and literally...have plenty of wiggle room for gray areas. ...which happens kind of alot in the thick of the battle, so to speak. it's important to have a steady, solid mind -- but still open and agile.