- Take no trades without establishing a complete and precise trading plan before the initial trigger.
- Keep an open mind for new market scenarios based on what the price action and pattern setups provide.
- Always trade with the trend.
- Once I am in a trade, stick with the original plan for target and stop-loss – Don’t panic!
- Make every trade meet the strategy requirements and what happens from there is up to the market.
- I need to exercise greater patience in both buying and selling.
- Be more willing to take a position, even if it is very small. It is tough though to gain the confidence to do so as the market has been tough. (more…)
Archives of “cardinal rules” tag
rssAri Kiev – The 10 Cardinal Rules Of Trading
The Ten Cardinal Rules
1. Learn to function in a tense, unstructured, and unpredictable environment.
2. Be an independent thinker versus a conventional thinker.
3. Work out a way to handle your emotions and maintain objectivity.
4. Don’t rely on hope and fear in the conventional sense.
5. Work continuously to improve yourself, giving importance to self-examination and recognizing that your personality and way of responding to events are a critical part of the game. This requires continuous coaching.
6. Modify your normal responses to certain events. (more…)
Trading To Win – The Psychology of Mastering the Markets
The Ten Cardinal Rules
1. Learn to function in a tense, unstructured, and unpredictable environment.
2. Be an independent thinker versus a conventional thinker.
3. Work out a way to handle your emotions and maintain objectivity.
4. Don’t rely on hope and fear in the conventional sense.
5. Work continuously to improve yourself, giving importance to self-examination and recognizing that your personality and way of responding to events are a critical part of the game. This requires continuous coaching.
6. Modify your normal responses to certain events.
7. Be willing to face problems, understand them, and recognize that they are in some way related to your behavior.
8. Know when problems can be resolved and then apply methods to solve them. That may mean giving up some control in order to gain a different control. It may mean changes in your personality, learning self-reliance, or giving up independence and ego to become part of a trading team.
9. Understand the larger framework in which trading occurs—how the complexity of the marketplace and your personality both must be taken into account in order to develop the mastery of trading.
10. Develop the right mind-set for trading—a willingness to commit to the kinds of changes in personal habits and beliefs that will drastically alter your life. To do this requires a willingness to surrender to the forces of the game. In order to be able to play at a maximum level, you have to let go of your egoand your need to have things your way.
Resolutions For 2012
Resolutions On Trading & Investing:
- Define my trading plan and stay with it.
- Take no trades without establishing a complete and precise trading plan before the initial trigger.
- Keep an open mind for new market scenarios based on what the price action and pattern setups provide.
- Always trade with the trend.
- The less trading I do, the better my results so for 2012 I’m adoping weekly/monthly time frames
- Once I am in a trade, stick with the original plan for target and stop-loss – Don’t panic!
- Make every trade meet the strategy requirements and what happens from there is up to the market.
- I need to exercise greater patience in both buying and selling.
- Be more willing to take a position, even if it is very small. It is tough though to gain the confidence to do so as the market has been tough.
- I am NOT going to overtrade. I will only make “A” trades.
- Don’t ever force a trade, stay in cash when unsure.
- I resolve not to violate my stops.
- Wait for opportunities instead of looking for trades.
- Do not make a move until your indicators say so.
- Follow this important Gartman rule: “Do more of what is working and less of what is not.”
- To clarify my trading approach in my mind and in writing.
- Be dispassionate and thoroughly objective when evaluating positions.
- Do not be afraid to cut a loss, even if the trade is later re-entered at a higher price / better set-up
- Never trade on impulse.
- To memorize and practice the cardinal rules of trading.
- Only trade when you can pay very close attention or exclusive attention to the market.
- Dedicate more time during non-market hours to prepare for trading.
- Take emotion out of my trading. Follow price action.
- I need to overcome my unreasonable fear of the market.
- Try to avoid personal bias in making decisions.
- Wait for pattern to work out – do not jump the gun.
- Don’t be in such a damn hurry. Wait out the times when the setup is just not there.
- Avoid buy and hold in times of high market volatility.
- Actually ignore the news and trade the charts! It’s harder than it sounds.
- Don’t force the trade. The market will open again tomorrow and there will be new opportunities.
- Don’t turn a trade into an investment. Continue to focus on price action.
- Approach each trading day well-rested, of clear mind, and with a positive, opportunistic attitude just like Kirk
Resolutions On Learning:
- Learn to do 1-2 things very well and focus.
- Write the plan for the year ahead. Specify initial position, goals, entrance and exit strategies for action, identify risks to take and manage.
- Study more on the weekends to prepare for the upcoming week.
- I will be more diligent in keeping a journal of EVERY trade made in the year.
- Quit searching for the holy grail of trading – there is none.
- Turn off CNBC and all other distractions in the way of my success
- I will keep good records and document all of my research, trades, and outcomes.
- Use the right side of my brain and be careful of the left.
- Do not blindly follow anyone else.
- Accept failure and move on.
- Methodically analyze what went right and wrong on each trade.
- Spend more time nightly looking at charts.
- Learn 10 new chart patterns this year and trade only setups identified by those patterns.
- Apply a consistent decision tree toward every single trade.
- Tune out the noise. No calls during the day. No more “experts”, no more TV and definitely, absolutely and without a smidge of doubt no more twitter.
- Transition from paper trading to live trading.
- Need to read more charts and read less newspapers.
- Assess my strengths and what is working well for me and determine how I can improve. Also, assess what does not add value and eliminate it.
- Stay with low risk, probability based methods.
- Every trade I take requires a one page description of why, how, and at what levels I intend to take action.
- Paper trade new ideas before putting real money at risk.
- Study and read more, establish a trading plan, follow the plan, experiment, re-evaluate and keep learning.
- I resolve to improve myself by: managing my emotions better, become more patient and understanding, define my goals more completely, and constantly review my efforts to these accords.
- My resolution would be to trade/invest during all market conditions. Emotion still has some control over my investments.
- Work on consistency!! (more…)
About Winning, About Losing
People lose money at the stock market for very simple reasons:
1. They don’t have a method at all. They rely on other people opinions.
2. People don’t have a winning method. The method they are trading has a negative expectancy. Being disciplined about stop losses and position sizing won’t help, if you are trading a losing method. Expectancy changes with volatility. When your method stops providing satisfying results, you either find another that is working in the current market conditions or stay on the side until things change.
3. Those who have a winning strategy often don’t use it. They get emotional and forget about their strategy.
“Good trading is 10% technology and 90% psychology. People defeat themselves. It doesn’t matter how often you repeat basic trading principles when almost no one will practice them” (Maoxian)
Everybody knows the four cardinal rules of trading, but so few people follow them — 1) Trade with the trend. 2) Cut losses short. 3) Let profits run. 4) Manage risk.
There is a big difference between knowing something and applying it. Most people don’t use what they know.
9 Lessons from Jesse Livermore
There are those who would convince you that it is somehow smart or in your best interest to be manically switching your investments around, back and forth, long and short, on a daily basis. To pay attention to this kind of overstimulation is the height of madness, even for professional traders.
The most storied and important trader who ever lived, Jesse Livermore, would be tuning these daily buy and sell calls out were he alive and operating today. Because while he was a trader, he was not of the mindset that there was always some kind of action to be taking.
Jesse Livermore’s legacy is a bit of a double-edged sword…
On the one hand, he was the first to codify the ancient language of supply and demand that is every bit as relevant 100 years later as it was when he first relayed it to biographer Edwin Lefèvre. Livermore himself sums it up thusly: “I learned early that there is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again. I’ve never forgotten that.”
On the other hand, Livermore’s undoing came at precisely the moments in which he ignored his own advice. After repeated admonitions about tipsters, for example, Jesse allowed a tip on cotton to lead to a massive loss which grew even larger as he sat on it – violating yet another of his own cardinal rules.
And of course, other than for a few moments of temporary triumph in the trading pits and bucket shops of the era, Jesse Livermore was not a happy man. “Things haven’t gone well with me,” he informed one of his many wives by handwritten note, before putting a bullet through his own head in the cloakroom of the Sherry-Netherland Hotel.
But he did leave behind a wealth of knowledge about the art of speculation. His exploits (and cautionary tales of woe) have educated, influenced and inspired every generation of trader since Reminiscences was first published in 1923. (more…)
The Ten Cardinal Rules
1. Learn to function in a tense, unstructured, and unpredictable environment.
2. Be an independent thinker versus a conventional thinker.
3. Work out a way to handle your emotions and maintain objectivity.
4. Don’t rely on hope and fear in the conventional sense.
5. Work continuously to improve yourself, giving importance to self-examination and recognizing that your personality and way of responding to events are a critical part of the game. This requires continuous coaching.
6. Modify your normal responses to certain events.
7. Be willing to face problems, understand them, and recognize that they are in some way related to your behavior.
8. Know when problems can be resolved and then apply methods to solve them. That may mean giving up some control in order to gain a different control. It may mean changes in your personality, learning self-reliance, or giving up independence and ego to become part of a trading team.
9. Understand the larger framework in which trading occurs— how the complexity of the marketplace and your personality both must be taken into account in order to develop the mastery of trading.
10. Develop the right mind-set for trading—a willingness to commit to the kinds of changes in personal habits and beliefs that will drastically alter your life. To do this requires a willingness to surrender to the forces of the game. In order to be able to play at a maximum level, you have to let go of your ego and your need to have things your way.