Trader Vics Rules...

D

dac8555

I was writing these in my own personal reference material...thought i may as well put em here to for those who wanted to see a good quick reference to some good rules.

hope it is helpful.

1. Trade with a plan and stick to it.
2. Trade with the trend
3. Use stop loss orders whenever practical
4. When in doubt, get out.
5. Be patient, never overtrade.
6. Let your profits run, Cut your losses short
7. Never let a profit turn into a loss
8. Buy weakness sell strength. Be just as willing to sell as you are to buy
9. Be an investor in the early stages of bull markets. Be a speculator in the latter stages of bull and bear markets.
10. Never average a loss, don’t add to a losing position
11. Never buy just because the price is low, never sell just becsue the price is high.
12. Trade only in Liquid markets
13. Never initiate a position in a fast market
14. Don’t trade on tips, don’t offer unsolicited tips or advice.
15. Always analyze your mistakes
16. Beware of “takeunders” (meaning takeovers dont always turn out as you thought)
17. Never trade if your success depends on good execution
18. Always keep good records of your trades
19. Know and follow the rules!


good trading to all...

Dan
 
I think these "rules" don't really say much of anything specific and can just as easily lead a new trader to lose money rather than make money.

RoughTrader
 
Quote from RoughTrader:

I think these "rules" don't really say much of anything specific and can just as easily lead a new trader to lose money rather than make money.

RoughTrader
More...

disagree 100%. I think specifics would lead a new trader to lose money, people need to find their own way with general guidelines, not just follow word for word what someone else says.

which one of these rules if followed do you think could lead to a loss?
 
all traders say that. the famous ones and the not so famous ones. it's really common sense.

nothing moves straight up and down, so you'll find that "cut you losses short and let your profits run" is easier said than done.
 
Quote from minmike:

Doesn't rule 8 contradict rules 2 and 11?
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mike...

Good question...each of these rules has an explnation after them to qualify. i dont see them as contradictory.

8. buy weakness and sell strength to me refers to overbought and oversold, or short term changes in overall trends. a good example recently would be OIH. at 130 was quite weak..and on oversold territory. it was a good short term buy in that area. As it moves into overbought...it would be a good short sale if it doesnt violate the downward trend. overall..the trend is down...and you can look for a good entry on the strength.

2. the trend changes obviously depending on your time horizon. A good time to enter a long position for a long term trend is on short term weakness. for example.

11. says dont buy JUST becuse the price is low...meaning if you need a much better reason to buy if the price is low. low priced stocks are normally there for a reason, and can require substantial stimulous to change directions.
 
you can always filter:

Quote from dac8555:

1. Trade with a plan and stick to it.
2. Trade with the trend
3. Use stop loss orders whenever practical
4. When in doubt, get out.
5. Be patient, never overtrade.
6. Let your profits run, Cut your losses short
7. Never let a profit turn into a loss
8. Buy weakness sell strength. Be just as willing to sell as you are to buy
***
10. Never average a loss, don’t add to a losing position
11. Never buy just because the price is low, never sell just becsue the price is high.
12. Trade only in Liquid markets
13. Never initiate a position in a fast market
14. Don’t trade on tips, don’t offer unsolicited tips or advice.
15. Always analyze your mistakes
***
17. Never trade if your success depends on good execution
18. Always keep good records of your trades
19. Know and follow the rules!


good trading to all...

Dan
More...

if a trader were to actually live by these rules as part of their base belief system, it's hard to see how they could end up here:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=73482
 
Quote from JimmyJam:

you can always filter:



if a trader were to actually live by these rules as part of their base belief system, it's hard to see how they could end up here:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=73482
More...

i know how traders end up on that list...

i have a theory...that there is a difference between Understanding and Comprehension in items like this.

I think most people understand these rules...and understand why they are important...there is another level of COMPREHENSION that takes place after the trader understands the rules...but has made mistakes and ceases to make those same mistakes again to where a good habit forms.

I think this level of comprehenion is where people really live by the rules and dont end up on the "broke" list.

to make an unrealted but perhaps relevant comparision:

a. Everyone "understands" that parents love their children, right?
b. But, you dont truly "comprehend" or feel the depth of the love and the sacrifice your parents made for you until you have your own.
 
I think these rules are great as far as general guildlines, although some are so vague to be almost meaningless.

And can anyone interpret #7 (Never let a profit turn into a loss)?

Taken literally, this means as soon as a trade moves 1 tick in your favor you move your stop to breakeven. This is obviously absurd.

For those who incorporate #7 into your plan, how do you do it?
 
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