Trading Rules

Small losses
Avoid big losses at all cost. The higher your percentage loss, the higher the percentage gain you need to get your money back. With a 50% loss you need a 100% gain to break even.

Control risk
Know your exit criteria before you enter a trade. As soon as the reason for your entry is not valid anymore exit the trade. I typically use hard stop losses.

Liquid stocks
Liquid stocks are easier to exit. As a matter of fact technical analysis is more reliable with highly liquid stocks. Lots of volume makes it more difficult to manipulate stocks.

Trade strong stocks
A strong stock has no overhead resistance and is trading near its 52 week high.

Just the charts
Never call a company for more details. Their job is to run a business. Trading for a living requires different skills. Everything you need to know is right there in front of you. If you can’t see it – it probably isn’t there.

Pressure
The stock needs to display some kind of basing pattern or consolidation pattern. Buy the stock near its initial breakout. Don’t chase stocks.

Market analysis
You need to know what kind of stage your stock is in. Stan Weinstein explains the different stages in his book. Trade in the direction of the primary trend.

Discipline
Stay disciplined. Keep emotions in check. Emotionally detached traders yield better results.

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Trading rules from great traders:

Dennis Gartman

Dennis Gartman’s Trading Rules

Video explaining some of his trading rules
Another video explaining his trading rules

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Dickson G. Watts

A Speculator’s Essential Qualities

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Tyler Bollhorn

30 Trading rules
How To Correct Common Trading Mistakes
Trading Advice

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Linda Bradford Raschke

50 Time Tested Classic Stock Trading Rules

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Ari Kiev

The 10 Cardinal Rules of Trading

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