List of Trading Rules!

You are always so ready to set up a fight that it blinds you to reality. You have so much to learn youngster.

Ignoring a method or rule is not the same as going against a rule. As you said, going against is fading the rule. So right off your post is on the wrong side and you are just getting started.

Going back to the first post of the thread and reading forward you will see that the posts are full of trading methodology that is being offered as Trading Rules. Semantics get you no points.

And sorry to burst your bubble, but the institutional money, that makes up 70% of the market participation, drives the market. Not the specialists, not the scalpers, not the ES and NQ one-lotters, not me, and dare I say, not you.

About win rate - the shorter the time frame the more important the win rate. It is only really important for micro traders. Remember that.

I am wondering if by my statement 'be long above and short below' you infer an "always in" method? If this is true, you have, not surprisingly, come to the wrong conclusion again. Because as I look at any stock and any index over the last 15 years, if you were long above the 200 and short below it, you made out very well. Of course you have to apply other "common" TA techniques like trendline breaks, shorter ma cross, etc.


Edit: I'm out of this topic now other than to moderate, so please don't think that no response from me means anything other than that.
 
Quote from inandlong:


And sorry to burst your bubble, but the institutional money, that makes up 70% of the market participation, drives the market . Not the specialists, not the scalpers, not the ES and NQ one-lotters, not me, and dare I say, not you.
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Even we're walking away from the main topic I'd like to say that :
Probably I'm not interpreting this correctly but from my point of view I don't agree with that affirmation ( bold).

Institutional money surely makes the 70 % of the money flow in to the markets however they are not the biggest percentage of participants but the smallest one.

The issue is that they control/move a large amount of stock/contracts in counterpart of the small trader/speculator ( e.g. they move 250 contracts in counterpart of 50 five-lotters )

Regarding the driven power of the specialists I have my doubts although I agree with the rest of your list.
 
Well , there are a lot of themes through this thread. IMO some far from trading rules . There's a lot of talking on methodology , strategies, common sense, fundamentals, etc , which calls my attention. Apparently traders don't have serious rules or simply they don't want to disclose them .

Since the friend's Fast Trader initial idea was to get some feedback about trading rules, besides all the rules that have been already posted in this thread, some of them " obvious " ( e.g. . Buy Low- Sell High, BTW is that a rule ? For me is just common sense) .

Some I follow :

1 - If I have 3 wrong trades ( losers) in a row I stop trading for the day.

2 - If I have 2 loser days in a row I don't trade the third day. I even don't turn my computer on the third day.

3 - If the market is trading in a narrow range like today ( a. m) , I don't place real trades but just paper trades. I don't feel comfortable trading narrow ranges.

4 - If I reach my goal for the day ( average) I tight my stops for the rest of the trading day.

5 - I don't trade the opening


Best.
 
Quote from inandlong:

Okay, more specifically to trading rules, the majority - which I will presume means the 70% of the money that actually drives the market - wants to be long when a stock breaks above the 200 day sma, and out or short below it.

The quote above would have you believe that the right thing to do would be to go short above the 200 and long below it. How many charts would you need to look at , or how much money would you need to lose to realize the fallacy of the quote?
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hmm..

ok..let's play with your example and see what where the fallacy is
if the trading rules of 70% of the traders is to

"buy when price cross above 200ma and vice versa"

so If price penertrates the 200ma, I would be looking for a
oppuntunity to short, but I still don't have a position YET
because there is no way to know whether the majority of the
traders is already long.

The confimation comes when price makes
new high but fails to hold and start crashing , we know the majority is already long because price is already retracing.
the minority 30% go short right here.

Those who brought at the high start cutting losses a bit too quickly( a majority trading rule , I cut my losses too, but at a optimal point) and the crash accelerates.



with no time, we are back at the 200ma, and most unfortunately, our majority trading rule "sell when price cross below 200ma" kicks in again and the market go nuts because the majority is long and needs to get out.

sounds familiar? this is call a whipsaw, and is the bane of all trading systems/rule.

the fact that everybody is using the same trading rule will change the market in such a way that the trading rule is no longer profitable. In the case where everybody use the 200ma rule, the market will change and the whipsaws will happen so frequently tthat the rule is no longer profitable. It's just simple population dynamics, when everybody gets on to band-wagon, that's when it stop.

knowing the majority will react according specific rule/logic is like getting a glimpse of the FUTURE.

The fact that everybody is using the same deteministic rules(as opposed to random buy/sell) create a setup to be exploited, That's actuallyall I am saying . I still can't see where the fallacy is...
 
Quote from vegasoul:




the fact that everybody is using the same trading rule will change the market in such a way that the trading rule is no longer profitable. In the case where everybody use the 200ma rule, the market will change and the whipsaws will happen so frequently tthat the rule is no longer profitable. It's just simple population dynamics, when everybody gets on to band-wagon, that's when it stop.

knowing the majority will react according specific rule/logic is like getting a glimpse of the FUTURE.

The fact that everybody is using the same deteministic rules(as opposed to random buy/sell) create a setup to be exploited, That's actuallyall I am saying . I still can't see where the fallacy is...
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and this leads to my second most important trading rule

and I know this is just going to piss everybody off, the dillema is this rule only works if 80% majority traders disagree with it.

rule2 : trade against technical analysis.

do u feel a strong compulsion to start calling me names and or saying something like " you don't understand technical analysis" ?

GREAT, because I am relying on most of you out there who feels this way to make this rule profitable.
 
Quote from Fast_Trader:

Hi, I'd like to get a general list of trading rules which could apply to any strategy. I'll start the list with some rules that I try to follow:

1. Take trades in the direction of the larger trend. Since I'm strictly a day-trader, the larger trend to me is based on 10 min and 60 min. charts. A swing trader might want to focus on Daily and Weekly charts.

2. Try to trade with the overall market direction based on market breadth indicators suck as TICK/TRIN, A/D etc, & direction of Dow.

3. Never enter a trade based on 'gut' feel alone.

4. When in doubt, stay out!

5. If one of your analysis tools is not working, e.g. charting platform issues, datafeed prblems, connectivity issues, DO NOT TRADE

6. If you're sick, take a day off or simply watch the market. DO NOT TRADE when you're not physically and mentally prepared.

7. Try to get at least 7 hours of sleep.

8. Do not trade due to boredom. Leave the PC, take a break, go outside. Do not trade due to boredom.

I might add to this list later on, but would like you all to post some nuggets of wisdom. Some rules you all try to follow on an everyday basis. Rules that really make your trading consistent.

Thanks,

-FastTrader
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Number 5 just got me yesterday. Yuck. Live and learn. LOL
 
Quote from MRWSM:




Number 5 just got me yesterday. Yuck. Live and learn. LOL
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$hit like that happens to all of us...you're right, live and learn. How do you think I decided to add that to my list of rules? :D

FastTrader
 
vegasoul I see your point and probably the difference in our view is the timeframe we are trading. I know I said I was not going to respond, but only fools and dead people don't change their minds.

The whipsaw is a short term event... in the long run. And it is the one caveat most often quoted by non-ma users. But to satisfy the curiosity, just put any chart on line setting, and take a look. Price does not whipsaw endlessly, day after day... ultimately, and sooner than later, price deviates from the 200. The whipsaw is a very short term event occuring occasionally, not as a rule. As a rule price deviates well from the 200 or the 50 or 40.

And the "overused" thing you just posted is another fallacy. Price patterns such as triangles, wedges, etc worked long ago, and continue to work. Why? Because human behavior repeats itself. All those patterns reflect is consolidation/congestion/indecision, etc. Show me one flag, pennant, wedge etc., that goes on forever. It doesn't. Price ultimately trends once again. Whether price moves in the direction "predicted" by the pattern is not relevant. The fact that once again the pattern developed, in whatever time frame, provides a heads up a pending break.
 
I agree with Inandlong here.

There will always be deviation from the average, and collecting that deviation can be very profitable indeed.

In fact it is possible to mathematically define an area onor near the average based upon the slope and incremet/decrement of the slope of the average as the actual operating area, and place an appropriate expanding/contracting % around the mean of the operating area. This will rarely be at the average, since if the price always stayed with the average, it would be a flat line in psite of the constant whipsawing movement.

This is not the case most of the time, and the smallest amount of time is spent with the average tracing horizontally.

Also to predict the future value of the average based upon the increment/decrement of price action. (hardly worth the bother but doable)


The patterns wedges etc. They constantly crop up and break out. If not human behaviour then what?

Best

Natalie
 
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