FROM AN EXPERIENCE
Great photographers never take a picture until everything is set up correctly and the subject is in focus.
If they have not analyzed the situation before taking the picture, their results will not be successful.
Traders need to follow the same steps. Your mind must be in focus and we must have a solid foundation in place before we execute a trade or else we will not have a high chance for success.
Trading rules from great traders are always worth reading. If you spend some time to understand the concept behind each trading rule this will improve your trading skills and take you to the next level. Also check this video where Dennis Gartman talks about the concept of keeping it simple.
1. Never, under any circumstance add to a losing position…. ever! Nothing more need be said; to do otherwise will eventually and absolutely lead to ruin!
2. Trade like a mercenary guerrilla. We must fight on the winning side and be willing to change sides readily when one side has gained the upper hand.
3. Capital comes in two varieties: Mental and that which is in your pocket or account. Of the two types of capital, the mental is the more important and expensive of the two. Holding to losing positions costs measurable sums of actual capital, but it costs immeasurable sums of mental capital.
4. The objective is not to buy low and sell high, but to buy high and to sell higher. We can never know what price is “low.” Nor can we know what price is “high.” Always remember that sugar once fell from $1.25/lb to 2 cent/lb and seemed “cheap” many times along the way.
5. In bull markets we can only be long or neutral, and in bear markets we can only be short or neutral. That may seem self-evident; it is not, and it is a lesson learned too late by far too many.
6. “Markets can remain illogical longer than you or I can remain solvent,” according to our good friend, Dr. A. Gary Shilling. Illogic often reigns and markets are enormously inefficient despite what the academics believe.
7. Sell markets that show the greatest weakness, and buy those that show the greatest strength. Metaphorically, when bearish, throw your rocks into the wettest paper sack, for they break most readily. In bull markets, we need to ride upon the strongest winds… they shall carry us higher than shall lesser ones.
8. Try to trade the first day of a gap, for gaps usually indicate violent new action. We have come to respect “gaps” in our nearly thirty years of watching markets; when they happen (especially in stocks) they are usually very important.
9. Trading runs in cycles: some good; most bad. Trade large and aggressively when trading well; trade small and modestly when trading poorly. In “good times,” even errors are profitable; in “bad times” even the most well researched trades go awry. This is the nature of trading; accept it.
10. To trade successfully, think like a fundamentalist; trade like a technician. It is imperative that we understand the fundamentals driving a trade, but also that we understand the market’s technicals. When we do, then, and only then, can we or should we, trade.
11. Respect “outside reversals” after extended bull or bear runs. Reversal days on the charts signal the final exhaustion of the bullish or bearish forces that drove the market previously. Respect them, and respect even more “weekly” and “monthly,” reversals.
12. Keep your technical systems simple. Complicated systems breed confusion; simplicity breeds elegance.
13. Respect and embrace the very normal 50-62% retracements that take prices back to major trends. If a trade is missed, wait patiently for the market to retrace. Far more often than not, retracements happen… just as we are about to give up hope that they shall not.
14. An understanding of mass psychology is often more important than an understanding of economics. Markets are driven by human beings making human errors and also making super-human insights.
15. Establish initial positions on strength in bull markets and on weakness in bear markets. The first “addition” should also be added on strength as the market shows the trend to be working. Henceforth, subsequent additions are to be added on retracements.
16. Bear markets are more violent than are bull markets and so also are their retracements.
17. Be patient with winning trades; be enormously impatient with losing trades. Remember it is quite possible to make large sums trading/investing if we are “right” only 30% of the time, as long as our losses are small and our profits are large.
18. The market is the sum total of the wisdom … and the ignorance…of all of those who deal in it; and we dare not argue with the market’s wisdom. If we learn nothing more than this we’ve learned much indeed.
19. Do more of that which is working and less of that which is not: If a market is strong, buy more; if a market is weak, sell more. New highs are to be bought; new lows sold.
20. The hard trade is the right trade: If it is easy to sell, don’t; and if it is easy to buy, don’t. Do the trade that is hard to do and that which the crowd finds objectionable. Peter Steidlmayer taught us this twenty five years ago and it holds truer now than then.
21. There is never one cockroach! This is the “winning” new rule submitted by our friend, Tom Powell.
22. All rules are meant to be broken: The trick is knowing when… and how infrequently this rule may be invoked!
(to be contd)
TODAY’S TRADING STRATEGY
OF NIFTY FUTURES – OCT 27
OF NIFTY FUTURES – OCT 27
Day resistance @ 6155
If trades above 6114 for 15-20 minutes and
crosses 6121 with volumes,
Nifty Futures goes upto 6135-50
If possible after that upto 6172-92
Day Support @ 6069
On the other hand if it trades below
6114 & cuts 6095
Watch a non-stop slide upto 6075-69
BANK NIFTY
Buy btwn 12416-37
T1 – 12469-85
T2 – 12495-501-22
Sell btwn 12350-29
T1 – 12297-80
T2 – 12271-65-44
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SHARE TIPS TODAY
Sell DCM @ 134.45
T1 – 132.75
T2 – 131.75
Sell ALCHEM @ 229
T1 – 227.10
T2 - 226.10
Sell MHRIL @ 435.70
T1 – 431.75
T2 – 427.75
Sell HDFCBank @ 2296
T1 – 2286
T2 – 2276
T3 – 2266
ASTRAL PREDICTION TODAY
Stock Market Prediction for 27th October 2010
Transiting Moon will be passing through Taurus Zodiac sign. Transiting Moon will be in applying aspect with Transiting Saturn, which indicates Market would make new high. Moon would be Vargottama, it would be good signal for Market. Market may go up between 9.43 and 10.12. Market trend may change after 13.20. Market would gradually go up. Market may go up or nearer to previous closing during last trading session.
Disclaimer
On repeated requests of the readers this astral prediction is started.
Traders are advised to attain some technical knowledge before they get into trades anyway
-EDITOR
ELIMINATE YOUR EGO AND OBSERVE
The most important change will only occur when you will learn to DIVORCE EGO FROM THE TRADE. Trading is a psychological game. Most people think that they’re playing against the market, but the market doesn’t care. You’re really playing against yourself. You have to stop trying to will things to happen in order to prove that you’re right. Listen only to what the market is telling you now. Forget what you thought it was telling you five minutes ago. The sole objective of trading is not to prove you’re right, but to hear the cash register ring.
*If you find yourself holding a winning position, adding up your profits, and confidently projecting larger gains on the horizon, you are probably better off exiting the trade. The odds are that the trade has run its course.
*When entering a trade with a market order and your fill is clearly better than expected, odds are it will end up being a losing trade. Good fill, bad trade. Get out!
*If all your ‘trading buddies’ agree with your expectations regarding the next big move, it probably will not work out. If everyone’s conviction level is as strong as the consensus, do the opposite.
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MESSAGE TODAY
Confidence is a plant of slow growth in an aged bosom;
youth is the season of credulity.
-WILLIAM PITT
RELAX CORNER
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