1. Commandment #1: "Thou Shall Not Trade Against the
Trend."
2. Portfolios heavy with underperforming stocks rarely
outperform the stock market!
3. There is nothing new on Wall Street. There can't be
because speculation is as old as the hills. Whatever happens in the stock
market today has happened before and will happen again, mostly due to human
nature.
4. Sell when you can, not when you have to.
5. Bulls make money, bears make money, and "pigs"
get slaughtered.
6. We can't control the stock market. The very best we can
do is to try to understand what the stock market is trying to tell us.
7. Understanding mass psychology is just as important as understanding
fundamentals and economics.
8. Learn to take losses quickly, don't expect to be right
all the time, and learn from your mistakes.
9. Don't think you can consistently buy at the bottom or
sell at the top. This can rarely be consistently done.
10. When trading, remain objective. Don't have a
preconceived idea or prejudice. Said another way, "the great names in
Trading all have the same trait: An ability to shift on a dime when the
shifting time comes."
11. Any dead fish can go with the flow. Yet, it takes a
strong fish to swim against the flow. In other words, what seems
"hard" at the time is usually, over time, right.
12. Even the best looking chart can fall apart for no
apparent reason. Thus, never fall in love with a position but instead remain
vigilant in managing risk and expectations. Use volume as a confirming
guidepost.
13. When trading, if a stock doesn't perform as expected
within a short time period, either close it out or tighten your stop-loss
point.
14. As long as a stock is acting right and the market is
"in-gear," don't be in a hurry to take a profit on the whole
positions. Scale out instead.
15. Never let a profitable trade turn into a loss, and never
let an initial trading position turn into a long-term one because it is at a
loss.
16. Don't buy a stock simply because it has had a big
decline from its high and is now a "better value;" wait for the
market to recognize "value" first.
17. Don't average trading losses, meaning don't put
"good" money after "bad." Adding to a losing position will
lead to ruin. Ask the Nobel Laureates of Long-Term Capital Management.
18. Human emotion is a big enemy of the average investor and
trader. Be patient and unemotional. There are periods where traders don't need
to trade.
19. Wishful thinking can be detrimental to your financial
wealth.
20. Don't make investment or trading decisions based on
tips. Tips are something you leave for good service.
21. Where there is smoke, there is fire, or there is never
just one cockroach: In other words, bad news is usually not a one-time event,
more usually follows.
22. Realize that a loss in the stock market is part of the
investment process. The key is not letting it turn into a big one as this could
devastate a portfolio.
23. Said another way, "It's not the ones that you sell
that keep going up that matter. It's the one that you don't sell that keeps
going down that does."
24. Your odds of success improve when you buy stocks when
the technical pattern confirms the fundamental opinion.
25. As many participants have come to realize from 1999 to
2010, during which the S&P 500 has made no upside progress, you can lose
money even in the "best companies" if your timing is wrong. Yet, if
the technical pattern dictates, you can make money on a short-term basis even
in stocks that have a "mixed" fundamental opinion.
26. To the best of your ability, try to keep your priorities
in line. Don't let the "greed factor" that Wall Street can generate
outweigh other just as important areas of your life. Balance the physical,
mental, spiritual, relational, and financial needs of life.
27. Technical analysis is a windsock, not a crystal ball. It
is a skill that improves with experience and study. Always be a student, there
is always someone smarter than you!
Source: www.zerohedge.com
No comments:
Post a Comment