“I try not to go against the moving averages; it is self-destructive.”
This is something that can cause a lot of losses for traders that fight a trend. Regardless of other technical indicators the moving average tells the trend.
“Before putting on a position always ask, ‘Do I really want to have this position?’”
There is no need to rush into any position, wait for your signal. Rushing into a position and chasing a stock is one of the main reasons that traders lose money. Follow your trading plan not your emotions and impulses.
“After a successful period, take a day off as a reward.”
While this applies more to discretionary day traders that trade with a lot of financial and emotional heat. I do think it is crucial that traders relax and take time enjoy their great trades and winning streaks. Enjoy your weekends after a great trading week.
“My biggest losses have always followed my largest profits.”
This is a caution against getting a big ego after a big winning trade. New traders tend to trade too big and go off their trading plan when they feel like they can not lose.
“Bottom fishing is one of the most expensive forms of gambling.”
Catching falling knives just tends to cause a trader to lose money not catch a bottom. Most traders just lose money fighting a trend.
“Before taking a position, always know the amount you are willing to lose.”
Every entry you make must also have a stop loss exit plan that you will take if proven wrong. You have to accept the amount of money you are willing to lose before you enter any trade. Almost every single trader profiled in Market Wizards insists that risk control is an absolute necessity.