Twenty-five Rules That I think are important to follow.
1. Divide your capital into 10 equal parts and never risk more than one-tenth of your capital on any one trade.
2. Use stop loss orders. Always protect a trade when you make it with a stop loss order 3 to 5 points away.
3. Never overtrade. This would be violating your capital rule.
4. Never let a profit run into a loss. After you once have a profit of 3 points or more raise your stop loss order so that you will have no loss of capital.
5. Do not buck the Trend. Never buy or sell if you are not sure of the trend according to your charts.
6. When in doubt, get out and don't get in when in doubt.
7. Trade only in active stocks. Keep out of slow dead ones.
8. Equal distribution of risk. Trade in 4 or 5 stocks, if possible. Avoid tying up all your capital in any one stock.
9. Use limit orders.
10. Don't close your trades without a good reason. Follow up with a stop loss order to protect your profits.
11. Accumulate a surplus. After you have made a series of successful trades, put some money into surplus account to be used on ly in emergeny or time of panic.
12. Never average a loss. This is one of the worest mistakes a trader can make.
13. Never get out of the market just because you have lost patience or get into the market because you are anxious from waiting.
14. Avoid taking small profits and big losses.
15. never cancel a stop loss order after you have placed it at the time you made a trade.
16. Avoid getting in and out of the market too often.
17. Be just as willing to sell short as you are to buy. Let your object be to keep ith the trend and make money.
18. Never buy just because the price of a stock is low or sell short just because the price is high.
19. Be careful about pyraminding at the wrong time. Wait until the stock is very active and has crossed Resistance Levels before buying more and until it has broken out the zone of distribution before selling more.
20. Never hedge. if yo are long of one stock and it starts to go down, do not sell another stock short to hedge it.
21.Never change your position in the market without a good reason. When you make a trade let it be for some good reason or according to some definite plan; then do not get out without a definite indication of a change in trend.
22. Avoid incrasing your trading after a long peroid of success or a period of profitable trades.
23. When you find a new system for trading, Paper trade until you are batting above 90%.
24. Stay away from stocks who have a spread of 1/2 point.
25. Dont trade in a panic.