Archives of “rule 1” tag

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Never Lose Money

  
Analysis, Education, Life
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Buffett: “Rule#1 is never lose money. Rule#2. is never forget Rule#1.”

Sounds impractical and ridiculous to most people.

That’s because there’s something wrong with their own approach and that is why the rules don’t resonate with them.

If your approach and methods are correct, the rules should make sense to you.

Whether you invest or trade, your account should steadily increase with time, if your stock market approach indeed follows Rule#1.

So…if you are looking for help, seek those who have some sort of stock market record, preferably public, that shows consistent increase over time.

You won’t get access to people like Warren Buffett or George Soros, but there are few bloggers out there you can seek advice from (i.e. Anirudh Sethi Report )

Vigilance

  
  Education
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Vigilance is the non-stop guarding and protecting of important things. In trading there is nothing more important than money. The Professional Trader takes his money very seriously and has given it a more serious term: “Capital”. Capital is everything to the winning trader. It is not just the end goal, it is the means and the source before, during and after the trades. The Professional Trader guards his capital very closely because it will allow him to trade today, tomorrow, next week, next month and next year and beyond. If capital is not protected at all times, then the entire effort for the year can be gone and future opportunities are severely limited. Vigilance in trading means holding the protection of your money, your capital as your constant highest priority. Properly protecting your capital includes starting with enough to trade wisely and be able to stay in the game when the inevitable downturns and losing streaks occur. (more…)

My 11 Trading Rules

  
  Education
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Trading in the markets is a process, and there is always room for self improvement. Here are my 11 rules that help me navigate the markets. By no means is this list exhaustive or exclusive.

Rule #1
Be data centric in your approach. Take the time and make the effort to understand what works and what doesn’t. Trading decisions should be objective and based upon the data.

Rule #2
Be disciplined. The data should guide you in your decisions. This is the only way to navigate a potentially hostile and fearful environment.

Rule #3
Be flexible. At first glance this would seem to contradict Rule #2; however, I recognize that markets change and that trading strategies cannot account for every conceivable factor. Giving yourself some wiggle
room or discretion is ok, but I would not stray too far from the data or your strategies.

Rule #4
Always question the prevailing dogma. The markets love dogma. “Prices are above the 50 day moving average”, “prices are breaking out”, and “don’t fight the Fed” are some of the most often heard sayings.
But what do they really mean for prices? Make your own observations and define your own rules. See Rule #1. (more…)

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