- First Rule is DO NOTHING!
- Look for high-probability SETUPs, not for trades!
- Slow Down (I am slown down already:)
- Be aware of THE crowd.
- Don't keep it simple stupid, keep it real (which is complicated) because there are many factors that influence the stock.
- No Diving!
- Don't think linearly about the price movement (cyclic, or sine waves).
- Don't have a pre-conceived idea where the market should go (up or down).
- Don't treat market as a driving range!
- Don't jump on every blip and create bastard blipsilons out of wed-locks.
- Don't over trade!
- Don't be a "buzz-kill" or "party pooper":
- If stocks are going your way early in the day, don't abort them too early!
- Give the trend, your friend, a chance to help you. Have some fun!
- Don't climb a steep rock and don't jump over a cliff.
Do's
- Make sure that you are emotionally calm!
- Screen your ideas harshly:
- Make sure your "sensible trade/investment ideas" have solid ground.
- It is repeatable.
- It has plenty of empirical evidence, just because it should does not mean it will.
- Do simulations:
- Paper trades are FREE!
- Research: Fundamentals matter: A clearly thought-out theme
- Future projection of growth. Here you can project linearly.
- Future events/catalysts.
- Observe the market:
- What sectors/stocks are doing well or poorly.
- How are the market reactions to earnings before and after.
- Think like a contrarian:
- Think about buying when the market is tanking, especially at the open.
- Think about selling when the market is rallying, especially when it is going parabolic.
- Determine the trends:
- Bullish (Bearish) long term trends - it means that the stock is trading above (below) 80 day SMA (also after the 15-80 day SMA cross-over point).
- Bullish (Bearish) short term trends - using intra-day (15 min bar?) chart to make the determination.
- Study the charts:
- Determine where the key technical points are, including key resistance, support levels, round number levels, etc. Exit points have to be adjusted to give room these key points.
- Determine the exit points before any entry because this is the last time when you have objectivity.
Be prepared
- Be physically ready - you need to be well-rested, feel energized.
- Be mentally ready - you need to be mentally sharp, not feeling down, stressed over things. Solve them before the battle.
- Fully armed -
- done the homework,
- understand what is going on in the market,
- on top of the stocks in you portfolio
- on top of the stocks you follow
- gone thru the charts and know where the key technical points are
