1. Forget the news, remember the chart. You're not smart enough to know how news will affect price. The chart already knows the news is coming. 2. Buy the first pullback from a new high. Sell the first pullback from a new low. There's always a crowd that missed the first boat. 3. Buy at support, sell at resistance. Everyone sees the same thing and they're all just waiting to jump in the pool. 4. Short rallies not sell offs. When markets drop, shorts finally turn a profit and get ready to cover. 5. Don't buy up into a major moving average or sell down into one. See #3. 6. Don't chase momentum if you can't find the exit. Assume the market will reverse the minute you get in. If it's a long way to the door, you're in big trouble. 7. Exhaustion gaps get filled. Breakaway and continuation gaps don't. The old traders' wisdom is a lie. Trade in the direction of gap support whenever you can. 8. Trends test the point of last support/resistance. Enter here even if it hurts. 9. Trade with the TICK not against it. Don't be a hero. Go with the money flow. 10. If you have to look, it isn't there. Forget your college degree and trust your instincts. 11. Sell the second high, buy the second low. After sharp pullbacks, the first test of any high or low always runs into resistance. Look for the break on the third or fourth try. 12. The trend is your friend in the last hour. As volume cranks up at 3:00pm don't expect anyone to change the channel. 13. Avoid the open. They see YOU coming sucker 14. 1-2-3-Drop-Up. Look for downtrends to reverse after a top, two lower highs and a double bottom. 15. Bulls live above the 200 day, bears live below. Sellers eat up rallies below this key moving average line and buyers to come to the rescue above it. 16. Price has memory. What did price do the last time it hit a certain level? Chances are it will do it again. 17. Big volume kills moves. Climax blow-offs take both buyers and sellers out of the market and lead to sideways action. 18. Trends never turn on a dime. Reversals build slowly. The first sharp dip always finds buyers and the first sharp rise always finds sellers. 19. Bottoms take longer to form than tops. Greed acts more quickly than fear and causes stocks to drop from their own weight. 20. Beat the crowd in and out the door. You have to take their money before they take yours, period. ....From the Author of The Master Swing Trader - Alan S. Farley
Ok, don't want to go through every subject and refute why these rules are not necessarily wise for everyone, it all depends on one's trading style. So here are a couple: 2. Buy the first pullback from a new high. Sell the first pullback from a new low. There's always a crowd that missed the first boat. What if the stock doesn't pullback after making a new high and keeps going up? Why wait for a pullback if you think the stock's ultimately going higher? 3. Buy at support, sell at resistance. Everyone sees the same thing and they're all just waiting to jump in the pool. Support and resistance is a very subjective matter. What you think is support and resistance may be different than what I think is. You may use congestions of price zones and I may use moving averages. They can both work profitably, but I don't agree with everyone seeing the same thing. 4. Short rallies not sell offs. When markets drop, shorts finally turn a profit and get ready to cover. Correct me if I'm wrong, but doesn't this contradict number 2? If a stock goes to a new high would that not be considered a rally? Do you want to short a stock at a new high if you think it's going higher ultimately but you want to make a measly couple points because you think it may experience it's first pullback? 11. Sell the second high, buy the second low. After sharp pullbacks, the first test of any high or low always runs into resistance. Look for the break on the third or fourth try. How do you know when the second high is? A high can only be known after the fact, so it's kind of hard to know when to sell the second high if I don't know when that is. That's all I feel like refuting right now, just thought I would put a different perspective on your words of wisdom you took from someone else.
G-Boa, thanks but no thanks. I am still learning!! Definitely no guru, I just happen across info that has helped me and just post it hoping it can help other traders.
Well of course nothing works all the time - I already posted this link but it's worth posting again just for you! http://youtube.com/watch?v=8m5oLQ5qLns Being wrong is going to happen, but what you do when your wrong is the thing that preserves or destroys capital.
Ok, so watched the video and yes he did call the market right. One thing I didn't hear though is any thing about money management or what you should do if you were wrong. He just kept stressing that you have to think about what you're going to do when you're wrong. Does he have a website explaining his rules for trading somewhere?
Yes, he does go into risk management as well as a lot of other excellent trading principles - really excellent stuff - - problem is, youtube only gives him 10 minutes so the thing to do is to go back and watch all of his vids lol Sorry, but that's how it is, for now - - - - currently he is in the process of getting his own site up so he can have longer vids. When I first found this guy, I went back and only had about 10 vids to watch to catch up - - but was well worth it! Like he says: "Each new video builds upon the last." I view it almost as a mini trading seminar split up into 5 to 10 minute videos. Well worth the price of the subscription - FREE lol
Interesting, good luck and hope you make lots of cash following him. I don't trade the S&P though, so can't say I'm to interested in all the vids.