Quote from rcanfiel:
And by the time you have your rules finally nailed down, you will not really be much closer to success. Most leveraged traders fail, miserably.
Regardless of what many say, the key to trading success is one thing: a clear edge, and ability to outperform on a regular, longterm basis. That is not dependent on tricks or witty sayings.
Find yourself a mentor, spend a LOT of screen time learning to read price action, avoid some of the anointed gurus (WizeTrade, whatever), etc. If they want your money but are unwilling to show you a verifiable longterm track record, they are little more than hot air.
All the feel-good psychology, books, and money management in the world won't overcome the house odds...
Here are my newbie personal trading/investing rules...
(I am primarily a long term investor, diversifying with position and swing trading strategies.
Personal trading rules
(Dynamic list: continually updated dependant on trading style and experience gained)
1. Trade with the trend: market, sector and stock
2. Reject buy/sell signals if not consistent with other trends
a. Reject bullish buy/put signals/bearish trend â bearish sell/put signals/bullish trend
3. Buy calls on uptrending stocks (index, sectorâ¦)
4. Buy puts on downtrending stocks (index, sectorâ¦)
5. keep losses small
6. always have a stop-loss, preferable mechanical trailing stop
7. never lower a stop in a long position, or raise a stop in a short position
8. place the stop simultaneous to the trade
9. never trade a dip without conducting research
10. be aware of upcoming announcements
11. review positions nightly
12. maintain trading log, review often, learn from mistakes
13. trade the facts, remove emotion
14. always use trading plan, know the entry and exit points
15. Paper trade until consistently profitable before risking real money.
16. 80% of portfolio conservative investments, indexâs, bonds, trust deeds etc (with stop-loss)
17. never more than 20% of portfolio for aggressive investments/trades
18. trading account not to exceed 10% of total portfolio
19. initial trading account not to exceed $50,000 during first 6-months, $100,000 after year one, $200,000 after year three
20. Become proficient in current strategies before adding strategies
--- a. initially trade indexâs, then sectors, then stocks
--- b. initial optionâs covered calls, then calls, then puts
--- c. keep it simple
--- d. use price action and volume as primary determination
--- e. use basic combination trend indicator/oscillator for confirmation only
--- f. go for sweet spot, wait for confirmation, do not attempt to time the tops and bottoms
21. Base hits â not home runs
22. Do not over trade, be patient, wait for opportunities
23. be consistent/disciplined
24. never add to a losing position
25. Only trade long positions with strong fundamentals / short positions with weak fundamentals
26. Back test all new trading plans and strategies (1-2-3-5 year periods)
27. Paper trade all new strategies prior to investing
28. never risk more than 1-2% of account on any single trade
29. never invest more than 20% of account on any single trade
30. be humble - on every trade there exists a more experienced trader on other side
31. do not become complacent
32. continue learning
33. If not 110% confident in trade, sit-out
34. Never risk monies which can not afford to be lost.. i.e. rent, food or other obligations
35. College/retirement fundâs to remain in conservative accounts
36. Pay self first 20% of earnings may be spent on discretionary items. Family fund.
37. Allocate 30% of earnings for taxes
38. Minimum of 50% of trading net earnings to be re-invested
39. Minimum of 75% of investment net earnings to be re-invested
