| THE TRADE DECISION | | | | feel uneasy. |
| 1. Never add to a losing position. | | | | 23. Measure yourself by profitable "days in a row," not |
| 2. Always determine a stop and a profit objective | | | | by individual trades. |
| before entering a trade. Place stops based on market | | | | 24. The best way to break a streak of "losing days in |
| information, not your account balance. If a "proper" | | | | a row" is to not trade for a day. |
| stop is too expensive, don't do the trade. | | | | 25. Don't stop trading when your on a winning streak. |
| 3. Remember the "power of a position." Never make a | | | | "When your hot, your hot." |
| market judgment when you have a position. | | | | 26. Three strikes and your out! Don't turn three losing |
| 4. Your decision to exit a trade means you perceive | | | | trades in a row into six in a row. When you're off, turn |
| changing circumstances. Don't suddenly think you can | | | | off the screen, do something else. "When you're not, |
| pick a price, exit at the market. | | | | you're not." |
| THE MARKET HAS CHARACTER | | | | 27. Scalpers reduce the number of variables effecting |
| 5. In a Bull market, never sell a dull market, in Bear | | | | market risk by being in a position only for seconds. |
| market, never buy a dull market. | | | | Day traders reduce market risk by being in trades for |
| 6. There are times, because of lack of liquidity, or | | | | a matter of minutes. |
| excessive volatility, when you should not trade. | | | | 28. If you convert a scalp or day trade into a position |
| 7. Trading systems that work in an up market may not | | | | trade, by definition you did not consider the risks of the |
| work in a down market. | | | | trade. |
| 8. There are at least three types of markets: up | | | | 29. Don't ever fret about a missed opportunity. There |
| trending, range bound, and down. Have different trading | | | | is always another one just around the corner. Besides, |
| strategies for each. | | | | several just happened that you didn't even know |
| 9. Up market and down market patterns are | | | | about. |
| ALWAYS present, merely one is more dominant. In an | | | | MARKET OPINIONS |
| up market, for example, it is very easy to take sell | | | | 30. If you look for market secrets you will only find |
| signal after sell signal, only to be stopped out time and | | | | things that no one cares about. Use the conventional |
| again. Select trades with the trend. | | | | tools. |
| 10. A buy signal that fails is a sell signal. A sell signal | | | | 31. Never ask for someone else's opinion, they |
| that fails is a buy signal. | | | | probably did not do as much homework as you. |
| 11. It's always easier to enter a losing trade. | | | | 32. When the market is going up, say "the market is |
| 12. In the "blowout" stage of the market, up or down, | | | | going up." When the market is going down, say "the |
| risk managers are issuing margin call position liquidation | | | | market is going down." Say it without qualifications, no |
| orders. They don't check the screen for overbought or | | | | "buts" attached. This is a reality check, you'll be |
| oversold, they just keep issuing liquidation orders. Don't | | | | amazed at how hard it is to say what is literally going |
| stand in front of a runaway freight train. | | | | on in front of you when your mind is full of |
| 13. You are superstitious; don't trade if something | | | | preconceived opinions. |
| bothers you. | | | | 33. THE DAILY MARKET COMMENTARY: I've never |
| NEWS | | | | had an opinion I didn't like, however, successful day |
| 14. Buy the rumor, sell the news. | | | | trading requires flexibility. Do your homework not to |
| 15. News is only important when the market doesn't | | | | develop a market opinion, but rather to understand the |
| react in the direction of the news. | | | | potential for both sides of the market. This will allow |
| 16. Read today's paper tomorrow. When you read | | | | you to make your trades based on what the market is |
| yesterday's paper each day with the knowledge of | | | | doing at the time of the trade. |
| what the market already did, you will affirm that this | | | | 34. Here is a quote to remember: "When you wake up, |
| mornings paper with yesterday's news has nothing to | | | | your instincts are wrong." |
| do with today's market. | | | | SOME FINAL THOUGHTS |
| A TIME TO TRADE | | | | 35. When you make a mistake of discipline, whine like |
| 17. On the open, never enter a new trade in the | | | | a fool to anyone that will listen. Errors in discipline are |
| direction of a gap. Never let the market make you | | | | mistakes you will keep on making for many years. |
| make a trade. (Closing an existing position is obviously | | | | Wearing ashes and sack cloth may help extend the |
| ok.) | | | | time before you do it again. |
| 18. The first and last tick are the most expensive. Get | | | | 36. If you squirmed and moaned while you read this list, |
| in late and out early. | | | | then you share two obvious characteristics with many |
| 19. When everyone is in, it's time to get out. | | | | of us: |
| 20. Never trade when you are sick. | | | | A. You have traded long enough to recognize that you |
| TRACKING YOUR TRADES | | | | (not the market) make mistakes, and you try to |
| 21. Size kills. Only change your unit of trading under a | | | | overcome them. |
| plan of attained goals. Also, have a plan for reducing | | | | B. Now this is ugly, you have become part of the |
| size when your trading is cold or market volume is | | | | market and you can never leave. |
| down. | | | | No matter where life takes you, you will always check |
| 22. Confidence kills. Remember, you really don't know | | | | the market and always want to continue being a part |
| anything. Respect the market every second of every | | | | of it. It's like that first true love, it will always be there no |
| day. Expect the unexpected. Always know your | | | | matter what the distance, no matter whether they are |
| position and exit your trade immediately whenever you | | | | alive or dead. |