Old rules…but very good rules..
They, who needs to keep an eye on the stochastic complex all the time, linear weighted moving averages, anti-aliasing methods, Fibonacci numbers, etc., usually notice, that they have so much data in front of their eyes, that they cannot make a rational decision. One technique says – Buy, the other says – Sell. One method recommends closing the trade, while the other calls for adding to the trade. It looks like a stamp, but simple methods work best..
Let's start..
1. The first and most important rule – in a bull market, everyone, as supposed, is in a long position. This may sound trivial., but how many of us sold after the first rally in a bull market, deciding, that the market has taken off too far and too fast. It was like this before, and I suspect, that this will continue to be the case in the future. In this way, we do not make profit, which should have accumulated, but in fact we are losing money, being in short. You can be in a bull market or in a long position, or outside the game. Remember, lack of position – this is also a position.
2. Buy that, what looks strong – sell that, what shows weakness. The audience keeps buying, when prices have already dropped. Professional buys, because prices have gone up. This distinction may sound counterintuitive., but here the buying power is at work. The rule of survival is not, to “buy below, sell high”, and “buy higher and sell higher “. Besides, when comparing different shares within a group, buy only the strongest, but sell the weakest.
3. When you set up a trade, enter it, as if she has the potential to, to be the biggest deal of the year. Don't enter the trade, until it is well thought out, including rules for adding to a trade and contingency rules for exiting a trade.
4. On minor corrections against the main trend, add to position. In a bull market, add to trading small pullbacks back to the support level. In a bear market, add on correction at the resistance level. Use a correction level 33-50% from the previous move or the corresponding moving average as the first point to add.
5. Be patient. If you are late with the entrance, wait for correction.
6. Be patient. Entering the deal, give it time to develop and create profit, which you expect.
7. Be patient. Old adage ” You won't lose anything, taking profit “, maybe, is the most harmful advice, ever given. Taking small profits – surest path to ultimate loss, which i can think of, because small profits are never allowed to develop into huge profits. Real money in trading is made on one, two or three big deals, who are allowed to develop in a year. You must cultivate the ability to patiently hold a profitable trade., to let her make real money for you.
8. Be patient. Entering the deal, give her time, to work; give her time, to isolate yourself from random noise; give her time, so that others can see those qualities of her, what did you notice earlier, than them.
9. Be impatient. As always, small and fast losses – best losses. It's not the loss of money that matters. Quicker, mental capital is important, which is exhausted, when you're sitting with a losing trade.
10. Never, under any circumstances, add to a losing trade, in order to “average” Position. If you buy, then each new purchase price must be higher than the previous one. If you sell, then each new selling price must be lower. This rule must be adhered to without question..
11. Do more than that, what works in your favor and less, what – against. Every day, looking at different positions in your portfolio, try to add to trade, which has the greatest profit and subtract from that trade, which is or is unprofitable, or shows the smallest profit. This – the basis of the old saying “let your profits run.”
12. Do not trade, until technical and fundamental factors come to an agreement. This rule will make clean technicians cringe.. Well,! I will not trade, I'm not sure yet, that simple technical rules, which I follow, and my basic research moves in tandem. Then I can act clearly, wait confidently and patiently.
13. If you have received a serious loss, take time out. Close all trades and stop trading for a few days. The mind can play a cruel joke with you after strong, rapid losses. A wish “recoup” – emotionally, and it cannot be added.
14. If you trade successfully, increase your rates. We all experience those incredible periods of time, when all our deals are profitable. When it happens, trade aggressively and a lot. We must procure our “hay”, while the sun is shining.
15. When added to trade, only add 1/4 – 1/2 from position volume. That is, if you hold 400 Shares, deciding to add, add no more, how 100 or 200 Shares. This will move the average price of your position by less than half the distance traveled., thus allowing you to ride out the 50% retracement without touching your average price.
16. Think, as a mercenary. We want to fight on the other side of the market, which wins, without wasting our time and capital on futile efforts in trying to grow, buying lower or selling at the high of some market movement. Our responsibility is, to earn profit, fighting shoulder to shoulder with the conquering forces. If neither side wins, then we shouldn't fight at all.
17. Markets shape their heights in violence, and your minimums – in a calm state.
18. The last 10 % bull market times usually cover half or more of the entire price movement. In this way, First 50 % price movements will take 90 % time, will require strong support and will be much more difficult to trade, than the latest 50 %.
There is nothing “Genius” in these rules. This – common sense and nothing else, but, as Voltaire said, ” Ordinary Common Sense – unusual. ” Trade – common sense business. When we trade against common sense, we will lose. Maybe, not always, but a lot, and ultimately. Trade easier. Avoid complex techniques with unclear technical systems and trade only in the direction of the main trend.
