What are your golden rules of on-line trading?

Question

I found "Rivkin's Rules" on a Yahoo finance site > http://au.biz.yahoo.com/switzer/finance/05102006/sharing_golden_rules.html
Can you add to the list or comment about these rules?

Answer 1

I'll give you some of mine; I have way too many:

Create a written plan. A plan is composed of two primary parts:
1.The blueprint is a preliminary action plan developed before trading begins. Review the plan every few weeks. It is a living document that evolves over time. I always revise my plan for the summer trading season since summertime market conditions call for different strategies.
2.The Journal is a day-to-day microadjustment of the blueprint. This is the document that requires you to adhere to your plan. Emotional aspects of trading on a daily basis are written in here. Questions such as
·Did I follow my blueprint today?
·Did I maintain discipline?
·Did I do the research required?
·Did I recognize support and resistance levels through volume?
·Was my methodology correct?

Ask these questions and answer in your journal. These represent intangible issues that technology cannot capture through a database. If you did the right thing and still lost money, make a note of that. If you did the wrong thing, make a note of that. Other questions should also be answered:
·What was my strategy (earnings play, split, momentum, etc.)?
·Did I exit on fear or logic?
·Did I do the right thing, and do I feel good about my decision?
·Would I make the same trade again in the same situation?
·Did I have confirming indicators when entering the trade?
·Was my discipline followed? Why or why not?

Writing stimulates thought. When you put your plan on paper, it somehow becomes more real than it is when it is just in your mind. Things may seem fine, but in black and white it seems unrealistic or improbable. Nothing is more expensive to a trader than trying to make something happen that is unrealistic.
Another important reason for the plan: you cannot deny it. If the plan says not to hold postions overnight, and you do anyway, you realize you have violated your own discipline. When the plan is only in your mind, it is easy to rationalize it away, and your discipline erodes like the sands of a beach.
The plan is a way to keep score, rather than just a P&L. Many more factors play into the process than just money. Emotions, accountability, responsibility, focus, and creative thought all get brought into the dynamics of trading versus a one-dimensional fixation on monetary gain.
Writing down what these motivations and components are for you while tracking your adherence to them each day, through your journal, increases exponentially the likelihood that you will achieve your desired result.

The rules are ever changing
Get a mentor.
There are no silver bullets in this business. No easy way to make money in trading.
Develop conviction.
The market has little room for arrogance or ego.
Avoid holding positions over weekends.
Scared money never wins.
Get the knowledge.
Know your strategy.
Use Level II as an indicator, not as an all-inclusive decision support tool.
Read the levels, not the ticks.
Know your order routes.
Gaps tend to close.
Supply and demand determine price.

Never allow your order flow to be sold. This is routing orders to a wholesaling market maker instead of routing them directly to the market through systems such as the SOES, SelectNet, a variety of ECN’s for NASDAQ issues, or through SuperDot for listed stocks.

Don’t wait for certainty. Especially for day traders, think of stocks as either “thick” or “thin.” Thick is highly liquid, and both relate to price levels of liquidity or lack thereof.

Let market indications lead you in and out of trades.
Be multidimensional. Mixed styles that includes day trades and swing trades.

Trade liquid stocks. Screen criteria for stock selection.
·Daily volume of at least 500,000 shares per day.
·Sufficient intraday price volatility. Look at beta.
·Correlation with major indices and sector leaders.
·Minimum of five active major market makers.
·Reliable technical indicators available.
·Strong book on at least two ECN’s.
·Tracked by analysts.
·News easily available.

Avoid chaotic stocks. Low-price penny stocks (less than $5).
Match volume to time. Fast markets, low liquidity spell = trouble.
Specialize.
Trade stocks with good correlation. Between stocks and major indices and sector leaders, provides relative indications.
Trade strong sectors. Be aware of sector rotation.
Do the research.
Forget about chat rooms.
No clarity, no trade.
Size the open.
Watch fair value.
Never use market orders on the open.
Never chase stocks.
Always look for confirmation among trading signals.
Know why you are in a trade, and where you will exit.
Set mental stops.
Don’t expect to squeeze all the juice from the orange.
Exit on reaction, not price.
Know the range within the time horizon you are trading.
Day trade the ranges and swing trade the trends.
Always use indicators to confirm charts and patterns.
Never replace instincts with technical analysis.
Never ignore volume regardless of your trading style.
Don’t make it rocket science, ‘cause it ain’t.
Know thyself.
Inspect what you expect.
Update and review weekly.
Don’t lie to your spouse or significant other.
Be humble and admit mistakes.
Never let emotions control you.
Avoid stock tips.
Never take home a loser.
Open trades on the anticipation of news; offset positions on what actually happens.
Define the strategy, and match the discipline to it.
Allow for more heat.
Exclude commission costs from your exit criteria.
Never let your confidence exceed your skill.
Know thy tax law.
Contemplate before you speculate.
Lose the labels. I’m a trader means big time. Rather, I’m a student.
Learn to pace yourself.
Follow your instincts.
Find your own game or recipe for success.
Learn to lose.
Make trading a habit.
Never let your attitude suffer.
The market is always right.

Stay grounded. Multidimensional trading requires a wide range of view that allows for other possibilities and tools that will help confirm and defeat ideas you have. Trading with a narrow focus of any one style is not advised.


Common Trading Rules to Follow:

Average winners, not losers
Never let a winner turn into a loser.
Take profits often.
Never mix disciplines. If you open a day trade, close a day trade.
Never try to trade back a loser. Don’t fight the tape.

----------------------------

And that's not the half of it.

One more tidbit of advice:
Success in trading will be enhanced if one abandons all efforts at prediction and focuses instead on knowing what to do when and if certain prices occur in the market.

Answer 2

Hi there,
You should try with Penny Stocks Trading (you can find more info here: http://pennystocks.toptips.org )

Penny stocks, also known as cent stocks in some countries, are common shares of small public companies that trade at low prices per share.
I've been subscribing to this PennyStock web site for about a year now and have loved the objective advice they give. He really does look for quality stocks and I've made some pretty nice profits on a lot of his suggestions. Being still fairly new to investing I have been dabbling a lot in penny stocks to try and grow my account. I may not have a big account, but it's a lot bigger than it was a year ago. On just one of Nathan's picks this year I managed to make my investment back ten-fold! Be careful! Penny stocks are notoriously risky but if you follow the right method the risk is almost 0. I suggest to invest only little money first and then reinvest the profits. This is the site I'm using: http://pennystocks.toptips.org
Cheers ;)

Answer 3

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Answer 4

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Answer 5

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Answer 6

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Answer 7

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Answer 8

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Answer 9

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