Richard Roda's trading rules

Old rules… But very good rules.

Those who needs to monitor all time a stochastic complex, the linear weighed sliding averages, smoothing methods, numbers of Fibonachchi etc., usually notice that at them before eyes so it is a lot of data that they cannot make the rational decision. One technician tells – purchase, other speaks – sell. One method recommends to close the bargain while other urges to add for trade. It is similar to a stamp, but simple methods work is better.

Let’s begin.

1. The first and most important rule – in the bull market, each as it is supposed, is in a long position. It can sound is trivial, but how many from us have sold after the first lifting in the bull market, having decided that the market has flied up too far and too fast. So was earlier, and I suspect that so will be and in the future. Thus, we do not profit, which should be accumulated, but actually we lose money, being in short. In the bull market it is possible to be or in a long position, or off side. Remember, absence of an item is too an item.

2. Purchase that looks strong – sell that shows weakness. Public continues to purchase, when the prices have already fallen. The professional purchases, because the prices were lifted. This distinction can sound illogically, but force of purchase here works. The survival rule not in that “to purchase more low to sell highly”, and “to purchase above and to sell still above”. Besides, at comparison of various shares within group, purchase only the strongest, and sell the weakest.

3. When establish trade, enter into it as though it has a potential to be the high finance of year. Do not enter into trade while it will not be thought well over, including rules for addition to trade and rules on a case of the unforseen causes for an exit from the bargain.

4. On insignificant corrections against the basic trend, add to an item. In the bull market add to trade on small recoils back to support level. In the bear market, add on correction in the order resistance. Use level of correction of 33-50 % from the previous movement or corresponding sliding average as the first point for addition.

5. Be patient. If were late with an input, wait correction.

6. Be patient. Having entered into the bargain, allow to it time to develop and create profit which you expect.

7. Be patient. An old proverb “you will lose nothing, having taken profit”, probably, is most a bad advice, ever to the data. A capture of small profit – вернейший a way to definitive loss which I can think up as small profit never allow to develop in huge profit. The present money in trade is done on one, two or three high finances which allow to develop for a year. You should cultivate in yourselves ability patiently to keep lucrative transaction, to allow it to make for you the present money.

8. Be patient. Having entered into the bargain, give it time to work; give it time to isolate itself from casual noise; give it time that others have seen those its qualities that you have noticed earlier, than they.

9. Be impatient. As always, small and fast losses – the best losses. Loss of money is important at all. Without delay, the intellectual capital which is reached when you sit with проигрышной the bargain is important.

10. Never and under no circumstances do not add to проигрышной to the bargain to “average” an item. If you purchase, each new bid price should be above previous. If you sell, each new ask price should be more low. It is necessary to adhere to this rule firmly without questions.

11. Do more than that works in your advantage and less than that – against. Every day, looking at various items in your portfolio, try to add to trade which has the greatest profit and to take away from that trade which is or unprofitable, or shows the smallest profit. It is a basis of an old saying “allow your profit to run.”

12. Do not trade, while technical and fundamental factors will not come to the agreement. This rule will force pure technicians to shrivel. Well! I will not trade, while I am not assured that simple technical rules to which I follow, and my basic researches move in a tandem. Then I can operate accurate, confident and patient to wait.

13. If have received серъезный the loss, take a time-out. Close all bargains and terminate trade for some days. Mind can play with you a malicious joke after strong, fast losses. The desire to “recoup” – emotionally, and it is impossible долускать.

14. At successful trade increase rates. All of us it is tested those improbable periods of time when all our bargains are favourable. When it happens, trade persistently and much. We should prepare our “hay” while the sun shines.

15. At addition to trade, add only 1/4 – 1/2 from item volume. That is if you keep 400 shares, having decided to add, add no more, than 100 or 200 shares. It will shift an average price of your item less than on half of the passed distance, thus allowing you to wait 50 %-s’ correction without a contact of your average price.

16. Think, as the mercenary. We after all wish to be at war on that party of the market which wins, without spending for nothing our time and the capital for useless efforts in attempts to grow up, purchasing more low or selling on a maximum of some market movement. Our responsibility consists in earning profit, struggling shoulder to shoulder with winning forces. If no party wins, we should not struggle in general.

17. The markets form the tops in violence, and the minima – in a quiet condition.

18. The last 10 % of time of the bull market usually cover half or more from all price movement. Thus, the first 50 % of movement of the price will take 90 % of time, will require strong support and there will be much more difficult for trade, than last 50 %.

There is nothing “ingenious” in these rules. It is common sense and anything other, but as Voltaire has told, “the Ordinary common sense – is unusual.” Trade – common sense business. When we trade illogically, we will lose. Probably, not always, but помногу, and in the end. Trade easier. Avoid difficult techniques with not clear technical systems and trade only in a direction of the basic trend.

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