20 Rules To Stop Losing Money

[setravis]

20 Rules To Stop Losing Money !

1. Don't trust others opinions -
It's your money at stake, not theirs. Do your own analysis, regardless of the information source.

2. Don't believe in a company -
Trading is not investment. Remember the numbers and forget the press releases. Leave the American Dream to Peter Lynch.

3. Don't break your rules -
You made them for tough situations, just like the one you're probably in right now. 

4. Don't try to get even -
Trading is never a game of catch-up. Every position must stand on its merits. Take your loss with composure, and take the next trade with absolute discipline.

5. Don't trade over your head - 
If your last name isn't Buffett or Cramer, don't trade like them. Concentrate on playing the game well, and don't worry about making money.

6. Don't seek the Holy Grail -   
There is no secret trading formula, other than solid risk management. So stop looking for it.

7. Don't forget your discipline -
Learning the basics is easy. Most traders fail due to a lack of discipline, not a lack of knowledge. 

8. Don't chase the crowd -
Listen to the beat of your own drummer. By the time the crowd acts, you're probably too late...or too early.

9. Don't trade the obvious -
The prettiest patterns set up the most painful losses. If it looks too good to be true, it probably is.

10. Don't ignore the warning signs -
Big losses rarely come without warning. Don't wait for a lifeboat to abandon a sinking ship.

11. Don't count your chickens -
Profits aren't booked until the trade is closed. The market gives and the market takes away with great fury.

12. Don't forget the plan -
Remember the reasons you took the trade in the first place, and don't get blinded by volatility.

13. Don't have a paycheck mentality -
You don't deserve anything for all of your hard work. The market only pays off when you're right, and your timing is really, really good.

14. Don't join a group -
Trading is not a team sport. Avoid stock boards,<3SOF is not included here  chatrooms and financial TV. You want the truth, not blind support from others with your point of view.

15. Don't ignore your intuition -
Respect the little voice that tells you what to do, and what to avoid. That's the voice of the winner trying to get into your thick head. 

16. Don't hate losing -
Expect to win and lose with great regularity. Expect the losing to teach you more about winning, than the winning itself.

17. Don't fall into the complexity trap -
A well-trained eye is more effective than a stack of indicators. Common sense is more valuable than a backtested system.

18. Don't confuse execution with opportunity -
Overpriced software won't help you trade like a pro. Pretty colors and flashing lights make you a faster trader, not a better one. 

19. Don't project your personal life -
Trading gives you the perfect opportunity to discover just how screwed up your life really is. Get your own house in order before playing the markets.

20. Don't think its entertainment -
Trading should be boring most of the time, just like the real job you have right now.


 

[wrangler]

Hi setravis
Very good set of rules of which there is some I've got to work on. One of my biggest problems is I think as soon as I sell I've got to buy the first stock that looks good instead of searching out for that one that looks better than the one I picked.
Goodluck trading

[shaker340]

Hello Setravis,
    Thanks, for the list of rules, I'm sure that my bank account would look alot better if I would follow more of the rules

[Stockmonger]

VERY nice. Im gonna print this out and hang it by my computer

[setravis]

Bring it back to front page for your benefit......

[vic666]

"Trading should be boring most of the time, just like the real job you have right now. "

That was my favorite of the list. MY downside has been - the excitement that trading brings. I love and pursue the excitement..and in the process, lose 

Just yesterday, I had 3 things written donw on my white board:

1.) Place a stop loss order ALWAYS...and adhere to it

2.) Stop asking questions AFTER buying a stock!!

3.) Stop craving for "EXCITING  TRADES".

excellent work Travis...and I agree totally...it's the discipline and money mgmt. that's a million times more important that the knowledge one possesses. I'm really working on that department as I type. Wish me the best my friend. 

[wrangler]

"Trading should be boring most of the time, just like the real job you have right now. "

That was my favorite of the list. MY downside has been - the excitement that trading brings. I love and pursue the excitement..and in the process, lose 

Just yesterday, I had 3 things written donw on my white board:

1.) Place a stop loss order ALWAYS...and adhere to it

2.) Stop asking questions AFTER buying a stock!!

3.) Stop craving for "EXCITING  TRADES".

excellent work Travis...and I agree totally...it's the discipline and money mgmt. that's a million times more important that the knowledge one possesses. I'm really working on that department as I type. Wish me the best my friend. 

Hi vic666
Thought I would give you some stop loss example that I use but all trader's should have their own set of rules for trading,,what work's for some might not work for other's it depend's on what amount of risk a person is willing to take.
I never take more than 8% loss on any trade including both the buy and sell commission when I figure my 8% stop loss,,when stock begin's to move up I'll look at making the stop loss at 5%.
I alway's look to take profit's at 20% so when the stock reaches 20% if it make's it that far I'll start using the low for the past five trading day's as a stop loss to lock in profit's if it should go back down,,if it doesn't after one week of trading go back and readjust you're stop loss to the low for the next week of trading and continue to ride it up that way.
After I buy a stock and get my stop loss set up and figure out what point to watch for 20% gain then I'll start watching it using two differant resistance to help determine if I should sell even if it hasn't hit the stop loss yet. I use support and resistance of a trend line and also if it had formed a pattern,,I like using ascending triangle breakouts on 2 or 3 times daily average.
Hope this makes since to you.
Goodluck trading

[vic666]

Wrangler...I appreciate your comments. ur strategy is pretty close to what William O Niel refers to in his book. Up until now, I've been making the biggest blunder a novice trader makes - not using a stop loss and not learning how to manage my losses. I had big wins in the past...but equally big losses. 

I've gone back to the reading table for now, albeit making some trades with higher prices stocks. Some of these books I read, I could swear every page had "me" in it...it was like they were talkin about me, and my ignorant and novice way of trading. I've learnt lessons...and now, I wanna put my education into practise.

I will use stop losses based on my swing trading strategy...it's kinda like if I buy a stock today (after it broke out from yesterday's high), then my stop loss will either be today's low or yesterday's low, based on how much I wanna risk. Of course, the stop loss price will be moved up as the stock moves up...I had some preliminary successes with the strategy...and although my trades haven't been as exciting and fast-paced as before...I'm slowly learning to control my losses.

It's a tough game, and I intend to survive thru' my first few years. I'm in this for the love of trading, and I hope to stay long enough to be a master at it. 

Thanks for your support!  applauds to you...and to Travis for starting this topic.

[wrangler]

Vic,,Watch for price swing's when using day by day stop losses you'll be taken out before a run has had a chance to show itself.
Here's an excellant book to buy if you're fairly new at trading and has some really good advise for beginner trader's. I would advise anybody to go buy it if they want to increase their knowledge of trading.
Technical Analysis for Dummies
By Barbara Rockefeller

The book How to Make Money in Stocks by William O'Neil is where I picked up using 8% stop loss and 20% gain rules I modified it to use it for my trading. It's also an excellant book to learn from.

[sebfr]

Hi,

great post Setravis...I applaud you

You're right : Trading is the art of not losing money...

You know vic666, i don't know if you have lost a lot of money, but rare are traders who have won a lot of money at the beginning. Me too. It is the price of experience. Wrangler talks about some great book but i would like to mention you a great book : "How i made 2000000$ in the stock market" By nicolas DARVAS. Before he won 2000000$ he lost a lot of money. A great lesson for beginners. There is always a lesson of the loss.