Thursday, December 25, 2014

My Modest Trading Rules

These rules I have borrowed from many traders and adapted to me.  They are a work in progress so I may update/add as I progress.

My Modest Stock Trading Rules:

  • Delay all entries until 5 mins after opening bell.
  • Only trade my watchlist.  Do not chase other traders picks.
  • Have two plans for a stock.  One if it opens weak and one if it opens strong and takes off running.
  • Only trade my setups
  • No set-up, No trade.
  • Use daily support/resistance, whole and half dollar marks to gauge risk and base trades off of
  • It is OKAY to take losses. A small loss or break even is good! Remember, wannabe heroes often die. Never turn a small loss into a huge one!
  • Only 3 losses per day permitted, or a maximum of $150.  Once that mark is hit, leave market and go have fun.
  • When you’re new It’s very hard to make $1k per trade but much easier to make $100. So I try to pick trades wisely to gain $100 at a time. Patience is key. 

      • If I can gain just $100 per HOUR trading (6 hour trading days) that means I will make $156k a year! $50/hr is $78k a year!
      • If I buy 10k of a .20 stock and immediately sell it at .21 that makes me $100 off just a $2k position in less than a minute. Do it a couple of times within an hour and I’m up a day’s pay.  however, if I buy 100 shares of a $50 and it moves $1, then I make the same amount of profit with a lot less risk.  Obviously you know which strategy I recommend!
      • I make many trades for smaller gains (bat for singles) vs trying to swing for fences & most likely end up striking out.  Sometimes singles turn into doubles, triples, and occasionally an in the park homerun.
      • Trade for skill, not money.  If you trade for skill, hit your technical marks on the cart, the money will be there at the end of the day.
      • Chart support & resistance are the two MOST IMPORTANT chart indicators I will ever need to know.
      • Trading is all about pattern recognition, being able to recognize instantly the current situation and how to react & trade on it.  Ticker, Volume, Trend.  Study charts and price action
      • Do not over analyze trades. Employ the “KISS” method; Keep It Simple Stupid.  I use only BASIC charting when I trade.
      • Do not trust Level 2 alone to make trade decisions.  Use as a reference only.
      • Filter out as much noise as you can when trading. (Twitter, Instagram, Excess Chat Rooms, Etc.)
      • Study, study, study.  This is a lifelong learning profession.  Never stop learning.

      1 comment:

      1. Good morning, Ed. With admiration I watch your blog and impressed with your results in trading. I live in Belarus (Minsk). Say what you need to train you to trade ????