The datrading Bible 76 commandments:
[One day when I have all the money I want I'll try my hand at day trading. Until then...-THG]
Maintain a positive attitude no matter how much you lose.
Stops are the key to success for many traders … limit your losses.
Successful traders buy into bad news and sell into good news.
The successful trader is not afraid to buy high and sell low.
Do not collect the opinions of others before entering trades, facts are priceless and opinions are worthless. In short, successful traders isolate themselves from the opinions of others.
Successful traders have a well-scheduled time for studying the markets.
Continually strive for patience, perseverance, determination and rational action.
Never get out of the market just because you have lost patience or get into the market because you are anxious from waiting.
The most profitable trading tool is simply following the trend.
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 a definite indication of a change in trend.
Dedication, persistence, thoroughness and hard work are the keys to investment success.
The most difficult task in speculation is not prediction, but self-control. Successful trading is difficult and frustrating. You are the most important element in the success equation.
The basic substance of price change is human emotion. Panic, fear, greed, insecurity, anxiety, stress and uncertainty are the primary sources of short-term price change.
Bullish consensus is typically at its high when the market is at a top. Also, there are few bulls at major bottoms.
Always discipline yourself by following a pre-determined set of trading rules.
Remember that a bear market will give up in one month what a bull market has taken three months to build.
Expand your sources for market info, but limit your sources for market opinion.
Don’t ever allow a big winning trade to turn into a loser. Stop yourself out if the market moves against you 20% from your peak profit point.
You must have a program, know your program and follow your program.
It is never possible to know everything about anything. A stock trader is in constant danger.
Successful trading requires five things. Knowledge, discipline, courage, money and the energy to merge the first four properly.
Expect and accept losses gracefully. Those who brood over losses always miss the next opportunity, which more than likely will be profitable.
The one essential ingredient to making money with money and keeping it is to have an organized effort.
The art of concentration can help you become a great trader. In other words, set aside time to think, plan, meditate, investigate, research, analyze, evaluate and select your trades carefully.
The key to successful trading is in knowing yourself and in knowing your stress point.
The real difference between winners and losers is not so much native ability as it is discipline exercised in avoiding mistakes.
The greatest risk for a stock trader is to rely on hope alone. Never substitute hope for facts. The greatest loss is loss of self-confidence.
Remember Mark Twain: "Only 10% of the people think, 10% think they think, and the other would rather die than think." Run from the tip as you would run from the plague. Regard the tip passer as one who knows not and knows that he knows not.
The man who goes to the top as a stock trader does not do as he pleases. He has trained himself to choose correctly between the two freedoms. The freedom to do as he pleases, and the freedom to do what he must do.
Stock trading errors include: a) Trading without reason; b) Trading on hope rather than facts; and c) Overloading without regard for capital.
Trade only when you have a good reason on an appraisal of fundamentals and using chart action for confirmation and timing of entry and exit.
Dream big and think tall. Very few people set goals too high. A man becomes what he thinks about all day long.
Have you taken a loss? Forget it quick. If you have taken a profit, forget it quicker. Don’t let ego and greed inhibit clear thinking and hard work.
One cannot do anything about yesterday. When one door closes, another door opens. The greater opportunity nearly always lies through the open door.
The deepest secret for the trader is to subordinate his will to the will of the market. The market is truth as it reflects all forces that bear upon it. As long as he recognizes this, he is safe. When he ignores it, he is lost.
Somewhere a change is occurring that can make you rich.
Beware of "Fools Disease" (i.e. … Waiting for trades that you’re sure are 100% profitable). It is better never to let yourself believe that you are 100% sure of anything.
Always gather the following information daily:
Defensive info
Available capital
Margins
Gross power
Net power
Calculated risk in open trades
Percent capital risked
Offensive Info
Potential profit
Potential loss
Margin required
Profit/Loss ratio
Profit/Margin ratio
Degree of certainty
It’s must faster to put a trade on than take it off.
If a market doesn’t do what you think it should, and you’re tired of waiting, you’d better be out of it.
Stay calm and maintain clear thinking when trading big positions.
Re-evaluate your position in the market if charts have been deteriorating and fundamentals have not developed as you expected.
Above all, be mentally prepared for the rigors of each trading day from the time you get up until you go to bed.
Believe that the market is stronger than you are. Do not try to fight the market.
Beware of large positions that can control your emotions and feelings. In other words, don’t be overly aggressive with the market. Treat it gently by allowing your equity to grow steadily rather than in bursts.
Capital preservation is just as important as capital appreciation.
Work hard at understanding the key factor(s) motivating the market(s) you are trading. In other words, the harder you work, the luckier you will be.
Do not allow minute-to-minute or day-to-day swings to change your conviction of where the market is going.
Set an objective for each trade you enter, and get out when you meet it. Don’t be greedy.
The news always follows the market.
There is only one side to the market, and it is not the bull side or the bear side; it is the right side.
A man must believe in himself and his judgment if he expects to make a living at this game.
Never volunteer advice and never brag about your winnings.
To buy on a rising market is a most comfortable way of buying. Buy on an upscale, sell on a downscale.
In a narrow market, there is no sense in trying to anticipate what the next big movement is going to be, up or down.
A loss never bothers me after I take it. I forget it immediately, but being wrong and not taking the loss is what does the damage to the wallet and soul.
It is profitable to study your mistakes.
Of all speculative blunders, there are few greater than selling what shows a profit and keeping what shows a loss.
Nothing is new in stocks. The game does not change and neither does human nature.
Standing aside is a position.
Never fade the fed.
Never underestimate how much time is necessary to wash out a market that is long.
Be advised that it is better to be more interested in the market’s reaction to new information than to be the piece of news itself.
Avoid sudden complete market reversals. If you decide to abandon either the long or short side of a market, wait before taking the opposite side.
"If a market moves seven consecutive days in one direction, watch for some type of correction on the seventh day." - W. D. Gann
People who buy headlines eventually end up selling newspapers.
Disregard all prognostications. In the world of money, which is a world shaped by human behavior, nobody has the foggiest notion of what will happen in the future. The successful trader bases no moves on what supposedly will happen but reacts instead to what does happen.
Worry is not a sickness but a sign of health. If you are not worried, you are not risking enough.
Except in unusual circumstances, get in the habit of taking your profits too soon. Don’t torment yourself if a trade continues winning without you. Chances are it won’t continue too long. If it does, console yourself by thinking of all the times when liquidating early preserved gains you would otherwise have lost.
A stock trader should clearly understand and always regard his risk of ruin. Traders who attempt a "career short" by taking huge positions for immediate profit are playing Russian Roulette with their capital. Always be on guard for the killer trade that can end your career as a speculator; it can turn you into a spectator instead.
When the market breaks through a weekly or monthly high, it is a buy signal. When it breaks through the previous weekly or monthly low, it is a sell signal.
Don’t form new opinions during trading hours. Decide upon a basic course of action. Don’t let intra-day ups and downs upset your game plan.
Take a trading break. A break will give you a detached view of the market and a fresh look at yourself and the way you want to trade for the next several weeks.
Assimilate into your very bones a set of trading rules that work for you.
Hope and fear are the two greatest enemies of speculation.
Keep records of your trading results.
