| 1. |
Know
why you are using the markets. Is your objective
to make money trading or to reduce cash market
risk? This will help you in deciding whether
you are a hedger in the market (reduce cash
market risk) or if you are a speculator (make
money trading). |
| 2. |
Always
trade with the trend. Bucking the trend can
be like standing in front of a freight train
or trying to swim upstream. Someone once told
me that trading against a prevailing market
trend is like trying to catch a falling piano,
painful. Instead, trade with the trend and ride
on the train. |
| 3. |
Do
not play "wait and see". Decide to
be either in or out of the market. Develop a
plan and execute the plan. |
| 4. |
Use
stops. When you enter a position, decide at
what point you will exit that position. This
prevents a loss from becoming a huge loss and
eliminates irrational, emotional decision-making. |
| 5. |
If
you are not a pure hedger, keep your losses
small. Do not let a winning position turn into
a loser. If you take a big loss on a position,
it makes it very difficult for you to earn a
profit over time. |
| 6. |
Do
not enter a trade without at least three good
reasons. Do not exit without at least three
good reasons. Emotion must not be one of the
three reasons. By forcing yourself to only act
after finding three reasons to do so, rational,
logical decision-making will win over emotions.
|
| 7. |
Do
not try to out guess the top or the bottom of
a market, as this is impossible to do. Let market
price signals tell you when to buy and when
to sell. |
| 8. |
Use
limit or price orders when appropriate however
do not be afraid to place orders at the market.
Trying to squeeze out an extra penny or two
can result in you missing the whole move. |
| 9. |
Prices
can easily move higher or lower than most people
expect. Do not buy just because a market seems
too low or prices are cheap. Do not sell just
because it seems too high. Markets can always
go higher or lower than most people would expect. |
| 10. |
Do
not cancel a stop to avoid closing a position.
You decided when you entered the position how
much risk you wanted to take, do not change
our mind in the middle of the trade. Stick to
your game plan, no matter what. |
Ten Rules for Better Marketing