The trading rules I live by are: 1. Cut losses. 2. Ride winners. 3. Keep bets small. 4. Follow the rules without question. 5. Know when to break the rules.
If you can't take a small loss, sooner or later you will take the mother of all losses.
My style is basically trend following, with some special pattern recognition and money management algorithms.
Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money.
If you want to know everything about the market, go to the beach. Push and pull your hands with the waves. Some are bigger waves, some are smaller. But if you try to push the wave out when it's coming in, it'll never happen. The market is always right.
Traders and Surfers both have to deal with feelings of missing out on the small ones, until the big one comes along. They also have to deal with feelings of staying with the big one.
It can be very expensive to try to convince the markets you are right
The key to long-term survival and prosperity has a lot to do with the money management techniques incorporated into the technical system.
In order of importance to me are: 1) the long term trend, 2) the current chart pattern, and 3)picking a good spot to buy or sell.
The markets are the same now as they were five or ten years ago because they keep changing-just like they did then
Trend following is an exercise in observing and responding to the ever-present moment of now
Trends become more apparent as you step further away from the chart.
Risk no more that you can afford to lose, and also risk enough so that a win is meaningful.
Charting is a little like surfing. You dont have to know a lot about the physics of tides, resonance, and fluid dynamics in order to catch a good wave. You just have to be able to sense when its happening and then have the drive to act at the right time.
A lot of people would rather understand the market than make money
The elements of good trading are: 1, cutting losses. 2, cutting losses. And 3, cutting losses. If you can follow these three rules, you may have a chance.
Pyramiding instructions appear on dollar bills. Add smaller and smaller amounts on the way up. Keep your eye open at the top.
Trying to trade during a losing streak is emotionally devastating. Trying to play 'catch up' is lethal.
Dramatic and emotional trading experiences tend to be negative. Pride is a great banana peel, as are hope, fear, and greed. My biggest slip-ups occurred shortly after I got emotionally involved with positions.
Working to anticipate the future can be a distraction from the important task of dealing with the present.
The trend is your friend except at the end where it bends
Good traders trade. Good letter writers write letters.
It’s all about sticking to your plan and experiencing feelings as they arise. If you are unwilling to feel your feelings, the temptation is to avoid them by jumping off your system
I think that if people look deeply enough into their trading patterns, they find that, on balance, including all their goals, they are really getting what they want, even though they may not understand it or want to admit it.
The biggest secret about success is that there isn't any big secret about it, or if there is, then it's a secret from me, too. The idea of searching for some secret for trading success misses the point.
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