Trader Vics Rules...

Quote from jordanf:

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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this refers to stops and price objectives.

for example...you buy XYZ at 130. 128 stop, 138 target. you are proven "RIGHT" or "profitable" when your price objective is hit or "wrong" when your stop is hit. in between is a bit of a grey area that doent count as profit or loss until one of the two numbers is hit.

If you reach your price objective...move your stop loss up to maintain a profit, and maintain the position.

For me. I have started to sell 1/2 the position half way to the price objective, to where if my stop is hit, I have still made some money.

this has obviosly led to having to take larger positions with tighter initial stop losses.
 
I say "Make your own rules".

Conventional wisdom is so often wrong. The few that understand that, and who carefully watch position size and risk/reward, will be the more successful traders over the "long haul" IMHO.

I routinely violate a lot of those rules, yet I consistently make money in up or down markets and have for years.

How is this possible? I know the limits and characteristics of my systems.

Good trading to all.
 
Quote from dac8555:

mike...

Good question...each of these rules has an explanation 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 doesn't 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 because 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.
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I get part of what you are saying. What it comes down to is fading short term trends in favor of longer tem trends. To get RSI in over sold while something is trending up, doesn't it have to trend down a bit, granted maybe in a different time, from than the time frame of the overall/longer trend? How does one distinguish from the "rules" written, wether it is weakness or the start of another trend.
 
Quote from Wayne Gibbous:

I say "Make your own rules".

Conventional wisdom is so often wrong. The few that understand that, and who carefully watch position size and risk/reward, will be the more successful traders over the "long haul" IMHO.
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Well said.

RoughTrader
 
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