9. The market’s reaction to news is more important than the actual news itself. Typically the market takes account of news before it is released, based on the expected announcement. Once the news comes out, it is more important how the market reacts.
11. Do not try to predict the future. Ask “should I be in or out of this stock right now?” This is the only decision to be made, whether looking at a new trade, or a position you already have.
4. Have written trading rules, and follow those rules diligently.
5. Follow the overall trend of the market, and let the market signal to you when to buy stocks and when to sell. Stocks are highly correlated to the market and therefore it is vital to follow the major indexes.
8. Never add to a losing position. Never average into a trade, or double up. Never average down. Cut your losses first, and quickly. The first cut is the best.
1. Before buying a stock, make sure you have as many positive reasons stacked in your favour as possible; this will increase your probability of success.
10. Sometimes the best investment is in cash. Do not feel that your investment money has to be invested in the stock market all the time. Sometimes it is far better to be on the side lines ready to buy some bargains. When the market is in a correction and downturn, investors should hold cash, and looking to shorting as money making opportunities.
13. If the market doesn’t do what you think it should, get out. The market is the reality. It is too big to fight against, just go with the flow.
2. Cut your losses short. Cut losses at absolutely 7% to 8% of entry price, as a stop loss.
12. Successful traders buy into bad news and sell into good news. The public will normally overreact to good or bad news, giving the experienced trader great opportunities to buy or sell.
14. Have fun! Life is a journey, not just a goal. Remember to enjoy the scenery on the way.
3. Let your profits run. Make sure you don’t get out of profitable positions too early. Use a trailing stop on the way up and move it up as the stock price goes higher.
6. Always let the price force your action. Always buy or sell based on the price breaking your stop. Don’t buy or sell just because the chart pattern or indicators have given a signal.
7. At the start and end of a trend the majority of the public are wrong. At times of frenzied buying or panic selling, it is often a good idea to be doing the opposite of the masses. The crowd is normally right with the trend, but wrong at key turning points.