in Trader University

Trading Truths

    1. It’s all about risk management … never risk what you can’t comfortably lose.
    2. Never fall in love with a stock.
    3. To be succesfull in trading; study, understand and practice. The rest is easier.
    4. Always start by assuming your analysis is WRONG and that people much smarter and with more recent information are already positioned opposite you.
    5. Never take on a position larger than your comfort zone. (Don’t overtrade)
    6. Patience. never chase a stock.
    7. Before entering the trade very think carefully what will make you wrong, write it down clearly and put it infront of you where you trade, and when your wrong get out happy you’ve followed your trading discipline.
    8. Buy strength, sell weakness. Most traders are essentially counter-trend; most traders lose.
    9. No one ever went broke taking a profit!
    10. Once you find a good one, hang on unless of course they do you wrong.
    11. Never add to a losing position! (Unless scaling in was part of the plan).
    12. Whenever you think you’ve found the key to the lock, they’ll change the lock.
    13. Do not overtrade.
    14. Trade price not perception.
    15. Know the difference between stocks that you want to stay married to and those that are just a fling.
    16. The only sure way to make a small fortune is to start with a large one.

and to paraphrase Will Rogers: Buy only stocks that will go up. Don’t buy the ones that don’t go up. “THIS is GAMBLING.”

    1. Cut your losses quickly and you may have a chance.
    2. An indicator works until it doesn’t.
    4. I will be charged a transaction fee.
    5. A healthy dose of ‘Common-sense’ mixed with a little ‘Patience’…increases the chances for trading success in the long-run…Let the trading set-ups come to you(i.e..master the art of patience)…Don’t let yourself be dragged in to chasing set-ups(i.e…show impatience)
    6. If it’s that obvious , it’s obviously wrong” … Joe Granville
    7. When you have that King-Kong feeling stop trading for a while.
    8. In this business only the sky is the limit. Our personality is the gravity.
    9. “I never benefited much from a move if I did not get in at somewhere near the beginning of that move. And the reason is that I missed the backlog of profit which is very necessary to provide the courage and patience to sit through a move until the end comes.”

Jesse Livermore/ How to Trade in Stocks

    1. never plunge, in or out, of the market. Move in deliberately slow adjusting steps over time.
    2. How do you know if you are overtrading and/or overleverged?

Simple! You feel “rushed” or compelled to plunge.

    1. Spend MUCH more time picking stocks (or trade setups) than timing the overall market. Depending SOLELY on the latter as a way to earn return is doomed to failure and for most a quick ticket into the poor house
    2. Don’t make any presumptions when entering into a new trade that you are going to be an investor or trader on it. It will tell you the answer depending on how it pans out later. Just don’t let a loser run. Objective is to get into a winning position and then stick with it as long as possible. Cutting a winner prematurely is more deadly and costly than hanging onto a loser for too long.
    3. Ever Present Temptations to ALWAYS Resist:


      • Trading a Forecast
      • Trading a move BEFORE it happens… don’t jump the gun
      • Trying to pick a top in an uptrending stock and vice versa
      • Asking or wondering “why?” to explain things
      • Being influenced by the external news/events. They are totally meaningless to market
      • Betting the farm
      • Being myopic or closed minded in your selections or beliefs
      • Trying to make alot in a least amt of time
      • Trying too hard, watching too closely
      • Assuming the “majority” is wrong
      • Trading on tips or “themes”
      • …and

Betting too much on any sinlge trade Not diversifying enough (over time, stock and sectors)