My Trading Rules
 

The following rules are relevant to my trading personality.  These key rules, if obeyed, will save me thousands upon thousands of dollars in acount equity.

 

Rule #1:    Follow Your Trading Plan (Added Jan 08/07)
Following your plan will not guarantee success to any degree, but there will be weeping and gnashing of teeth guaranteed if you fail to follow your plan.

 

Rule #2:  Honour your Stop Losses  

Always enter a stop loss as soon as you enter the trade.
Being stopped out in the green is always better than hoping for green.  Always set your stop just below the nearest established support level. 
Never move this stop loss point unless the stock breaks above the nearest established resistance level. Never add to this position unless the stock breaks above the nearest established resistance level. Exercise discretion when considering to close your trade before your stop loss is hit.
(Added Jan 08/07) Do not change a stop loss level during the market session. 


Rule #3: Decrease position size if you need to take wider stops


Rule #4:  Be Patient

Do not try to guess, anticipate, prognosticate, or predict what the chart WILL do, but instead, wait for the chart to tell you what it IS doing.  Put in the time to look for and select charts with well-behaved, good quality, high probability, low risk setups.   
(Added Jan 08/07)Do not chase, but instead, wait for those setups to come to you.

 

Rule #5:  Review all your previous closed trades

Determine whether you had a specific reason for buying the stock that would compel you to make a similar purchase if the same conditions existed today.    
(Added Jan 05/07) Seek to understand why your thesis succeeded, and why it failed.


(Added Feb 25/07) Rule #6:  Trade for the Right Reasons

 Do not trade out of boredom.  Do not trade for the sake of trading.