- Trade accordingly to what you've lost in the past months: Enjoy your spoils, but look long-term. When you get a trade right, take your profits. When you get a trade wrong, don't wait for it to turn around; just take your profits.
- You're not always going to be right: Don't be ridiculous. Look at how poorly Warren Buffet is doing right now, and use him as a perfect example of how even the best lose too. Read #1 in order to learn how to deal with that.
- Watch your technicals closely: Take all emotion out of your trades; if the stock/ETF/iETF is at a strong resistance or support, sell it or buy it (respectively). Don't be greedy and try to wait for the stock/ETF/iETF to bottom out or push higher.
- Pick a strategy that works all the time: But I thought you just said that you lose sometimes? You do, but that doesn't mean your strategy doesn't work 24/7. Trade with what works with you and your goals of trading (hopefully it's to bank some serious coin) and set up indicators that work with your goals. If you need to, run fake money with it first to make sure it's flawless.
- When you need days off, take them: It won't kill you to do that. If the market goes up, then damn, you missed a day. The market finds an equilibrium, so if it's up on a four-day stint, don't buy in to snag a couple of easy money makers because you will lose. Instead, wait for the beginning of a downtrend and play the bear card. If you don't like the bear card, then wait for the pullback and then the new uptrend.
- Profit correctly: What's that mean, "profit correctly"? It means when you make a profit, don't reinvest right away. There's something called opportunity loss in the economic world, and what it means is that when you lose money, you're not just losing a green piece of paper but something more important; a vacation, an enjoyable dinner with your family, a trip to the jewelry store for a deserving wife, or a renovation on the house. Hence, I shall reiterate not to reinvest right away but instead analyze what you could use your profits for instead.
- Enjoy trading: It's tough to enjoy the market when it seems as though you suck at trading; the reality of it is you don't suck, but instead, you struggle. Enjoying your trading allows you to relax, doesn't pressure you into trading off of emotion and stupidity, and it also allows you to win.
- Winning is Good: Self-explanatory.
I didn't have time this weekend to develop my strategy, so that will be in tomorrow's edition. I hope you all enjoyed the Super Bowl (glad the Steelers won, representing PA well!) and your weekend. Tomorrow will set the tone not just for the week, but for the month. I will no doubt be taking advantage of the tone through my analysis of tomorrow's trading session. In my opinion, watch the Financial sector, iETFs/ETFs, and Gold. Heads up on Steel, Silver, Healthcare, and Tech. The ISM should be looking grim for tomorrow, so dig your foxholes now. Hope you enjoyed my rules!
ZM
I like your style. see u on stockTwitts.
-gio "thehawaiitrader"