Wednesday, January 5, 2011
I wish I knew this when I first started engaging in the speculative art of trading. If someone were to ask me how should I trade? I would reply:
Before you buy, understand that your thoughts maybe wrong.
Buy what is going up and sell what is going down.
Risk management is essential, so buy small and add if the market gives you the green signal.
Further on risk management, if market does not do what you expected then just close out the position.
If market does what it's supposed to then add in that direction.
Never average losers, for any reason at all.
Be patient with winners, and very impatient with losers.
If market does not do what it is supposed to in a defined time frame, then exit and say, "next."
Spend thousands of hours reinforcing these concepts and hopefully you will learn them but most likely you will make the same mistakes over and over again. As mentioned before this is the primary reason for writing this blog...simply reinforcement of the concepts I am trying to master.
Posted by d.m. at 12:23 PM