 | Plan your trade and trade your plan. |
| The successful trader is not afraid to buy high & sell
low. |
| Avoid getting out of the market just because you have lost
patience or getting into the market because you are bored. |
| Avoid getting in or out of the market too often. |
| The most profitable trading tool is simply following the
trend. |
| Losses make the speculator studious -- not profits. Take
advantage of every loss to improve your knowledge of market
action. |
| The most difficult task in speculation is not prediction
but self control. Successful trading is difficult and
frustrating. You are the most important element
in the success equation. |
| The basic substance of price change is human emotion.
Panic, fear, greed, insecurity, anxiety, stress, and
uncertainty are the primary sources
of short term price change. |
| Avoid allowing a big winning trade to turn into a loser.
Stop yourself out if market moves against you 20% from your
peak profit point. |
| Successful trading requires four things. Knowledge,
disciplined courage, money, and the energy to merge the
first 3 properly. |
| Expect and accept losses gracefully. Those who brood over
losses always miss the next opportunity, which more than
likely will be profitable. |
| The key to successful trading is in knowing yourself and
in knowing your stress point. |
| Since there is always the possibility of surprise in thin,
dead markets, less capital should be risked there than in
markets which are broad and moving. Limit the risk in
any one trade to a maximum of 10% and the risk in all open
trades to a maximum of 25% of trading capital
(risk=percent of available capital). Determines this each
day, adding profits and subtracting losses in open trades,
and combine this net figure with your trading capital. |
| Believe that "the big one is possible" -- be
there when it starts. Have the power to act, be rested
mentally and physically, and cut your losses quickly. |
| Have you taken a loss? Forget it quick. If you have taken
a profit, forget it quicker. Don't let ego and greed inhibit
clear thinking and hard work. |
| Somewhere a change is occurring that can make you rich. |
| Recognize that weather markets are inherently more
volatile. Therefore, widen out your stops and give market
plenty of room to move so it doesn't take you out
prematurely. |
| Re-evaluate your position in the market if charts have
deteriorated and fundamentals have not developed as you
expected. |
| Beware of large positions that can
control your emotions and feelings. In other words don't be
overly aggressive with the market. Treat it gently, allowing your equity to grow
steadily rather than in bursts. |
| Capital preservation is just as important as capital
appreciation. |
| When a market's gotten away and you've missed the first
leg you should still consider jumping in even if it is
dangerous and difficult. |
| Work hard at understanding the key factor(s) motivating
the market(s) you are trading. In other words, the harder
you work the luckier you'll be. |
| Never add to a losing position. |
| The news always follows the market. |
| To buy on a rising market is a most comfortable way of
buying. Buy on a scale up. Sell on a scale down. |
| Commodities are never too high to begin buying or too low
to begin selling. But after the initial transaction, avoid
make a second unless the first shows a profit. |
| The principles of successful commodity speculation are
based on the supposition that people will continue in the
future to make the mistakes that they have made in the past. |
| Don't pioneer highs or lows. Let the market tell you a
high or low has been made. |
| As go the oats, so goes the feed grain markets. |
| Except in unusual circumstances, get in the habit of
taking your profit too soon. Don't torment yourself if a
trade continues winning without you. Chances are it won't
continue long. If it does, console yourself by thinking of
all the times when liquidating early preserved gains you
would otherwise have lost. |
| Avoid getting rooted in a trade because of the feeling
that it "owes" you something -- or, just as bad,
the feeling that you "owe" it enough time to show
what it can do. If it isn't going anywhere and you see
something better, change trains. |
| Optimism means expecting the best, but confidence means
knowing how you will handle the worst. Avoid making a move
if you are merely optimistic. |
| Repeatedly re-evaluate your open positions. Keep asking
yourself: would I put my money into this if it were
presented to me for the first time today? Is
this trade progressing toward the ending position I
envisioned. |
| What was once support, now becomes resistance. The reverse
is also true. What was resistance, now becomes support. |
| As a rule of thumb, good trend lines should touch at least
three previous highs or lows. The more points the line
catches, the better the line. |
| In bull markets, sell signals will not always work, and in
bear markets, buy signals will not always work. |
| The clearest and easiest way to determine a trend is from
previous highs and lows. Higher highs and higher lows mark
an up trend, lower highs and lower lows mark a downtrend. |
| Standing aside is a position. |
