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7 Trading Rules for Flash Traders

  
  Education
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1. Keep adding to losing positions. 
What the heck, price bound to turn soon. Martingale method sounds great. Consider adding on double to loosing trades. When price turns I’ll laughing all the way to the bank even I have to close my initial entries at loss.

2. Don’t use any stop-loss
Why bother with stop-loss. It’s for pussies anyways

3. Don’t waste time with money management
Thank you very much but I already know how to manage my own money. Why bother with money management nonsense.

I can use my time doing more trading and making money instead delving into all that mumbo-jumbo technical jargon.

4. Keep trading
I cannot afford to loose any opportunities. I need to be always in markets, day in day out. After all life is to short to waste golden opportunities. I cannot afford them passing by me.

5. I trust my great indicators
Why bother to learn to read charts and all that price action garbage while my sweet indicators are doing it for me. Leave the hard work to those suckers.

6. Buy the bottoms and sell the tops
I cannot understand why those people wasting their time trying to read charts. When price moves up significantly I sell, when price moves down I buy. Simple, buy low sell high as the saying goes.

7. Always check media and internet for good tips.
Let those suckers do the hard work again and I just use their work. After all all those experienced people in media cannot be far of from the truth as they have the insight knowledge.

25 Golden Rules

  
  Education
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#25-3/4. Do as I do – not as I say – but do it without delay! (NB: 13F-HR’s are too late!)  

#25-1/2. The trend is your friend….errrr….ummm…..except when its not.  

#25-1/4. Whatever kind of metaphorical market animal you are (bull, coq, chicken, weasel, whatever), always remember that Pigs Get Slaughtered.

#25. Buy “The Best of Breed” companies…..unless they are priced at levels preceding the moment when Pigs Get Slaughtered, or when the trend is not your friend, or I am saying the opposite of what I am doing.   

#24. NEVER short “Best of Breed” companies…except when Pigs Are Getting Systematically Slaughtered in other “Best of Breed” companies (but don’t get piggy puking out the pigs). 

#23. Cut your losses short and let your winners ride – but not when pigs are getting slaughtered 

#22. No one ever made a dime by panicking … unless apparently you’re following the previous rule #23 which says you should cut your losses short and let your winners ride.

#21. NEVER double-down (except when you have material non-public information and deep pockets) or if you’re Ed Thorp, or if you’re playing at The Martingale Room. 

#20. “Systems” always stop working (Even if they DID actually work at one point). So forget about asking about their “system”: what you really want to know about is their Plans B&C for when it DOES stop working (and why they’re not using them NOW).

#19. Diversify to control risk – except if you are Eddie Lampert

#18. Don’t own too many names – unless you’re Ed Thorp or diversifying to control risk per the above rule 

#17. Invest in what you know – unless you don’t know a whole lot about those things. 

#16. Buy when others are (almost finished being) fearful. 

#15. Buy when there is blood in the streets – but only after it has dried a little bit.  (more…)

The Difference Between Gamblers and Traders

  
  Education
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Yes, the vast majority of traders are gamblers, maybe the majority of market participants are in fact gamblers. The traders that are gamblers trade with no plan and without understanding the odds are stacked against them. Whether it is buying far out of the money options with no method for profitability or randomly chasing stocks on a whim, gambling is when you risk money with the odds against you and have no edge. The losses of the gamblers is where the majority of the profits come from to the winning traders in the markets who have an edge.

Now the other side is the traders that consistently win by using an edge that gives them an advantage over the other traders. The winning traders are not trading against the casino they are trading against the gamblers. They have become the casino, like the casino they know the odds are in their favor and they will be profitable in the long run. Like the casino has table limits they have risk management to not over expose themselves to any one bet by the gamblers. The biggest problem that gamblers have is their emotions that cause them to always lose in the long term by placing bets based on feelings instead of the odds. The winning traders trade based on probabilities being in their favor and pick their trades carefully based on the best chances of success.

The casinos are built from the losses of the gamblers, the winning traders accounts are built on the gambling of the traders with no plan, no edge, and no risk management.

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