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...
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.
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.
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'.
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"