Trading Rules

It is a bloody and unfair fight for those who are uninformed, undisciplined, yet ready to make a lot of money.

  1. Trade in direction of the market and not against it.
  2. Have a system and stick to it. The simpler, the better.
  3. Always use stops. Automatic or manual. Just do it!

Other Rules

  1. Avoid the open, if you don't know what you're doing.
  2. Trends test the point of last support/resistance. Enter here even if you find it scary. What's more terrifying is entering mid trend.
  3. Trade the chart. Forget the news. You're not smart enough to know how news will affect price. The chart already knows the news is coming.
  4. Buy the first pullback from a new high. Sell the first pullback from a new low.
  5. Exhaustion gaps get filled. Breakaway and continuation gaps don't.
  6. Best time of day to trade: first two hours (before 11 o'clock Eastern time) and last 75 minutes (after 2:45pm Eastern time). Avoid trading from 12:00pm to 2:00pm (Eastern time) because traders and floor workers in the New York stock exchange go to lunch.
  7. Price has memory. What did price do the last time it hit a certain level? Chances are it will do it again.
  8. Make sure a stock has a well formed pattern before entering a trade.
  9. The first sharp dip always finds buyers and the first sharp rise always finds sellers.
  10. Trends never turn on a dime. Reversals build slowly.
  11. Bottoms take longer to form than tops. Fear acts more quickly than greed and causes stocks to drop from their own weight.