Trading Philosophy
1. Know the companies I invest in. Take the time to research the company for few days from different sources. Make sure I read the entire news article and not just the headlines.
2. On the first trade cycle, only trade half positions or less to get a feel for how the stock trades.
3. Keep close tabs on the health of the industry groups my stocks are in.
4. Don't put all my eggs in one basket. No matter how good a trade looks, I will not commit all my capital. Keep spare cash on hand, or a trading stake in reserve (hedge). If you're out of money, you're out of the game.
5. For every position I enter, establish a target and a stop-loss. This is the key to trading discipline. Have a plan before I get in and stick to it.
6. Trade with the trend. Don't fight it.
7. I don't know with 100-percent certainty whether the trade will be profitable or not.
8. I don't know how much money will be made or lost on a trade.
9. If I do not control the profit outcome and do not know with 100-percent certainty which trades will work, then the I should spend 100-percent of my time concentrating on the only element of the trade I can control – the risk of the trade.
10. The key to my success is to gain the ability to pinpoint how much I can afford to lose. Thinking about losing requires discipline. By focusing acutely on my trading plan, the probabilities for profits or losses and streaks of each, and risk control, risk-taking becomes more manageable and can give me the ultimate gift – FREEDOM!!!!!
11. Many hours of preparation occur long before any trade is entered. GET USED TO IT!!!!! The market will always be there and there will always be more opportunities around the next corner.
12. Monitoring a profitable trade in progress also requires discipline – follow my trading plan. Do not be concerned about minuscule fluctuations if my goal is higher. There are two sets of questions that I will ask myself:
A) "Is the market still in the same primary trend since I placed the trade? Am I comfortable with the risk level on this trade?"
If the answer to both of these questions is "yes" I should stay in the trade. If the answer is "no" to either of these questions then its time to exit the trade.
B) "Has the pattern in the trade changed from the original pattern? Has the initial price objective been reached?"
If the answer is "yes" to either of these questions its time to exit the trade. If the answer is "no" then the trade must continue.
13. Trading is a business of dealing with probabilities, not certainties. I never know which trades will work; the problem arises when I only ‘think’ I know."
14. Always remember, sentiment rules the short term while fundamentals rule the long term.
15. On longer term trades I should heed X_DEV's signals, because they are the better calls over the longer term. Unemotional, objective price points based on mathematics will always favor a trader/investor that's in it for the long haul. Any optimized X_DEV chart is proof of that.
