Trading Rules of Thumb

Discussion in 'Strategy Development' started by trhudson, May 16, 2011.

Do you trade using rules of thumb?

  1. Yes

    2 vote(s)
  2. No

    4 vote(s)
  3. Maybe

    2 vote(s)
  1. Just wanted to know if anyone out there is trading based on Rules of Thumb...

    If you have any good ones, shoot them my way, so I can try to take the other side...

  2. Roark


    Never average down.
  3. Thanks...Don't think I will be doing that one.

    I was referring to my previous post when I was told that a Gap that hadn't filled after three days would probably run.

    I asked probably? He said it was a time-tested 'Rule of Thumb'...if that is the case and it was a profitable venture, then it would back-test that way as well.
  4. The normal ones:

    Don't average down
    Cut losses short
    Let winners run
    Don't risk more than 2% of your account per trade
    Stop for the month after a 6% drawdown

    I pretty much break all of those rules constantly. Those are the rules most traders follow... most traders loser money.
  5. Lornz


    I only have one: Don't give away hard earned knowledge to strangers on message boards! :cool:
  6. OK, I will stop.

  7. AK100


    If you rush into a trade, chances are it will be a bad one. For example, ABC or XYZ stock suddenly makes a big move, and you're thinking I've got to have some of that. Well, probabilities suggest you're going to wish you hadn't got any of that.

    Conversly, if you wait for a trade, chances are it will be a good one.

    Summary: Be extremly wary of what I call 'rushed trades'.
  8. Don't lose more than you win:)

  9. Agreed. Most FH's can't resist the allure of a perceived "bargain".

    Making a mistake is acceptable. It's why pencils have erasers (and divorce courts).

    Staying wrong is not acceptable. Cut your loss and move on.

    Adding to a mistake is compounding the error. Reflects an stubborn ego. Egos are expensive "pets"

    Paul Tudor Jones: "only losers average losers"

  10. Why? "They" won't use it anyway.
    #10     May 17, 2011