Good Trading Rules

I felt it necessary to lay down some ground-rules for good trading.

Here it goes...


Rule # 1: NO FEAR ALLOWED!  I know this seems like a rather presumptuous rule, but fear has a way of polluting everything that it touches and making people do stupid stuff.  And, I know that if I simply tell you that you are not allowed to be afraid, then it will help at least someone trade without fear.  The market runs or lags largely on investor sentiment, or emotion.  When fear grips the investors in a stock, it will plummet.  When they are confident in it, it will be stable and rise, for the most part.  If we could control everyone playing a particular stock and limit them only to those who are able to trade without negative emotion, then we could run a stock up virtually forever.  But, since we can't control others, we must control ourselves.

Rule #2:  NO BID WHACKING!  Regardless if you decide to play the alerts that I will be posting on Twitter or not, it is a bad thing to whack the bid.  It stalls the momentum of a stock and ruins the trade for other traders.  Whatever plays you decide to play, please act like a seasoned trader and sell on the ask price on the way up.  Which brings us to our next rule.

Rule #3:  CAPTURE GAINS ON THE WAY UP!  This really relates to one of my tip-top rules... Pigs Get Slaughtered.  With that in mind, we are not trying to reach our goal in one trade.  That would be nice, but let's be practical.  The road to success is paved with small, consistent gains.  That will be our aim.  The philosophy I will be applying will be to let the stock run, if it is a strong runner, and then as it starts to fall back, place a safety net (limit order) under it to catch it when it falls.  This will apply mainly after I achieve a gain of 50% or more.  Anything that doesn't reach 50%, I will keep my finger on the sell button to minimize any potential of loss.

In the past, I have recommended using stop limit orders, however, I have learned recently that the Market Makers can "play" with a stock and manipulate it down just to "take" your stop limit order and then bring the stock right back up.  Because of that, I recommend monitoring your trades in real time and maintaining a readiness to enter a limit order to sell on a moment's notice, so to speak.  This will keep the Market Makers from manipulating the stock's run in such ways.  It's ok to enter a limit order to exit above the stock's price anytime, but please don't enter one as a stop below the stock's current price until you are ready to exit the trade.

If you cannot monitor your trade in real time throughout the day, then please consider not participating in the trades that I alert.


* NOTE:  Most plays that I alert will be for intra-day trading only.  That means quick in, quick out.  There may be exceptions to this, but this will be the general rule.


That's it for now... any questions, please post them in the comments section below or contact me on Twitter.