Ten Fast & Effective Trading Principles

Ten Fast & Effective Trading Principles
  1. NEVER add to a losing trade, look to get out of it not to make it a bigger loss.
  2. Never allow a big winning trade to turn into a big losing trade.
  3. Trade price action using your trading plan, don’t try to trade the news, opinions, or your own fear or greed.
  4. If a gap does not fill in the first hour and half of trading in the stock market it usually just keeps going in the direction of the gap.
  5. In the  stock market trading above the 200 day  moving average tends to be bullish and below the 200 day tends to be bearish. It generally works to trade the long side off support above and the short side during rallies when below.
  6. “Look for low risk, high reward, high probability setups.” – Richard Weissman

  7. Never lose more than 1% of your total trading capital on any one trade.
  8. Buying after some confirmation of strength or shorting after some confirmation of weakness gives a trading better odds of success than catching falling knives or shorting rockets that are in blast off mode.
  9. In equity indexes buying long swing trades near the 30 RSI (14 period) on the daily chart or selling short over the 70 RSI (14 period) present good probabilities of winning trades as long as risk is managed and winners are allowed to run. $SPY $DIA $IWM $QQQ
  10. Having a long bias in the stock market is an edge in the majority of market environments and stocks. Shorting stocks is going against the long term flow of equity buyers and takes a quick hand to escape with profits on the short side.