These are 30+ years of knowledge and passion.
- DO NOT LOSE YOUR ARSE ON FRIDAYS
Traditionally; Friday is a book squaring day. It is by far the most unpredictable, the most difficult trading day of the week. The final three hours of trade in America are the final three hours of trading worldwide. 2/3 of the players are either sleeping or enjoying wine over dinner. Do not give your hard earned money away on a crap shoot.
- NEVER ADD TO A LOSING POSITION
If they are a good buy at 60, they must be a real good buy at 50 and an incredibly good buy at 40. This strategy may work from time-to-time, but over a 30-year trading career the only thing you will say a real good buy to is, good bye to your money.
- NEVER TURN A WINNER INTO A LOSER
There is a reason for every trade made. Some are scalps, while some positions are established for long-term plays. When you get the immediate edge on a scalp, or a nice lead on a long-term spec, do not turn a winner into a loser.
- NEVER TRADE OUT OF BOREDOM
Probably the worst trade in the book is the boredom trade. You trade for the sake of trading. You trade because you are a “trade-aholic”. You are bored and you need the “action”. If you are bored, go for a walk.
- NEVER REVERSE OUT OF A BAD TRADE
You have a bad trade on. It is time to take your loss. Never flip the position all in the same trade. Instead, walk away. Take a small break. In the long run, flipping your position will result in being topped and tailed.
- NEVER TRY TO RECOUP A BAD TRADING DAY ALL IN ONE TRADE
You are a 10-lot trader and have lost $2,000
- NEVER TAKE A LOSER HOME OVERNIGHT
A losing trade is a losing trade. Hoping the market comes back is not trading. Hoping is hoping. It is better to get out and have a good night’s sleep.
- NEVER SPREAD OUT OF A LOSS
Your have a bad trade on. To spread out of it leaves you with two problems instead of one. Eventually, you will attempt to scratch the trade by lifting a leg. The old saying about lifting a leg goes like this. When you lift a leg, you end up tinkling on your other shoe. Take your loss and move on to your next trade.
- NO OVERTRADING
Before you make a trade, you should know where to place your stop with regard to your monetary risk. Some of my best long-term ideas never made a penny because I had too big of a position on from the start and could not take the heat. I was forever right, just early.
- MAKE YOU OWN RULES AND STICK TO THEM
Every trader knows their strengths and weaknesses. These rules above are my rules. Make your own rules and stick to them.