These are the 20 Golden Rules I wish to follow in my trading always
Add these simple rules to your daily trading and build consistent profits.
1. Forget the news, remember the chart. You're not smart enough to know how news will affect price. The chart already knows the news is coming.
2. Buy the first pullback from a new high. Sell the first pullback from a new low. There's always a crowd that missed the first boat.
3. Buy at support, sell at resistance. Everyone sees the same thing and they're all just waiting to jump in the pool.
4. Short rallies not sell offs. When markets drop, shorts finally turn a profit and get ready to cover.
5. Don't buy up into a major moving average or sell down into one. See #3.
6. Don't chase momentum if you can't find the exit. Assume the market will reverse the minute you get in. If it's a long way to the door, you're in big trouble.
7. Exhaustion gaps get filled. Breakaway and continuation gaps don't. The old traders' wisdom is a lie. Trade in the direction of gap support whenever you can.
8. Trends test the point of last support/resistance. Enter here even if it hurts.
9. Trade with the TICK not against it. Don't be a hero. Go with the money flow.
10. If you have to look, it isn't there. Forget your college degree and trust your instincts.
11. Sell the second high, buy the second low. After sharp pullbacks, the first test of any high or low always runs into resistance. Look for the break on the third or fourth try.
12. The trend is your friend in the last hour. As volume cranks up at 3:00pm don't expect anyone to change the channel.
13. Avoid the open. They see YOU coming sucker
14. 1-2-3-Drop-Up. Look for downtrends to reverse after a top, two lower highs and a double bottom.
15. Bulls live above the 200 day, bears live below. Sellers eat up rallies below this key moving average line and buyers to come to the rescue above it.
16. Price has memory. What did price do the last time it hit a certain level? Chances are it will do it again.
17. Big volume kills moves. Climax blow-offs take both buyers and sellers out of the market and lead to sideways action.
18. Trends never turn on a dime. Reversals build slowly. The first sharp dip always finds buyers and the first sharp rise always finds sellers.
19. Bottoms take longer to form than tops. Fear acts more quickly than greed and causes stocks to drop from their own weight.
20. Beat the crowd in and out the door. You have to take their money before they take yours, period.
(to be contd)
Managing open positions is the most difficult task the trader faces.
1. Decide in advance how actively you should manage open positions. The pros watch every tick and act on short-term swings. Part-timers read the morning paper and learn everything they need to know. Your own efforts need to fall somewhere in between.
2. You develop your own trading plans and strategies rather than relying on books and news. You notice how you're finding more opportunities than you have time to trade while looking through your charts. You look forward to the trading day with a growing sense of confidence and empowerment.
3. You feel more like a student than a master. You learn new things every day and can't wait to apply them to real-life trading scenarios. You listen closely to everything you hear, trying to pick up hints and concepts that will improve your performance. You expand your studies into everything market-related, including economics, fundamentals and balance sheets.
4. You stop visiting stock boards and chatrooms, because they don't add anything to your trading goals. You realize that everyone in those places has ulterior motives. You develop a healthy skepticism about companies, market-makers and even other traders. You realize that no one is really interested in your success as a trader, except for you.
5. You become more private in your discussions about the market with family and friends. You learn to keep your opinions to yourself, because they're just idle discussion. You never talk about open positions or ask others what to do with them. You recognize that opinions count only when they're backed up by cold, hard cash.
6. Trading starts to feel like any other successful profession. Your average profits get bigger while your losses get smaller. You experience fewer draw-downs that drain your capital and undermine your confidence. Your trading day starts to get a little boring, but you prefer the lack of emotional highs and lows.
7. You grade your performance each day and recognize when your actions did not meet your rising standards. You notice how certain times of the day are particularly dangerous or rewarding for your trading style. You keep a written diary that describes your strengths and weaknesses in stark detail.
8. You never cut corners in your market analysis, no matter how tired or exhilarated you feel at the end of the day. You set aside time to review your daily results, download fresh data and uncover themes for the next session. You don't trade at all when non-market matters keep you from finishing your nightly preparation.
9. You watch all types of markets, even those you're not trading at the time. You realize the next opportunity could come from anywhere, and you want to be prepared. You also understand that your trading interests will change over time, so you want to be ready for the next big thing.
10. You keep detailed trading records and update them on a nightly basis. You look at both profits and losses with complete detachment and a keen eye for self-improvement. You don't "conveniently" fail to include those trades you'd rather forget about.
TODAY’S DAY TRADING STRATEGY
OF NIFTY FUTURES – OCT 06
TODAY
Resistance @ 6216
Crossover over the resistance takes the value to
6245-75
Support @ 6164
Breaching the support Nfutures slides upto
6148-14
and then to 6090 – more chances for the movement
in this direction
BANK NIFTY
Buy btwn 12662-83
T1 – 12716-33
T2 – 12749-70
Sell @ 12595-75
T1 – 12542-25
T2 – 12508-487
Nifty, Bank Nifty levels and intraday news updated here gives astonishing success rate (more than 95%) that is more than enough for the readers to attain a decent profit daily.
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Sell CCL @ 328
T1 – 324
T2 – 318
JOHN LEKAS: EXPECTS DOW TO HIT 6300 BY 2011 END
John Lekas of Leader Capital is a bear and expects the Dow to hit 6,300 by the end of 2009 and 4,200 by the end of 2011. Going “below the double dip” on weak earnings on the top and bottom line. He thinks unemployment will be a drag on the economy [mentioning that 785,000 jobs were lost using the U6 data point, not the 265,000 number promoted] and that number will get worse, “26 to 27 million people out of work, that’s not going to work, and until that number gets better we will not see a recovery”.
He also thinks in-organic growth from extraordinary items will drive earnings going forward (asset sales etc.) but consolidations, mergers and refinancings recently have helped. Michael Cuggino of Permanent Portfolio Funds took the opposite view. You have to give credit to the last standing bears.
I thought what John said about municipalities was the most interesting part.
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