1 Never risk more than 10% of the capital on every position.
2 Use of stop-loss orders.
3 Do not make overtrading.
4 Do not let a gain into a loss.
5 Do not go against the trend.
6 When in doubt leave the market.
7 Treat active shares.
8 Do not put all your capital on a single value, a single sector, one market.
9 Do not limit your orders, pay the market price.
10 Do not close a position without reason.
11 Put money aside for emergencies.
12 Do not buy just to cash a dividend.
13 Do not average down.
14 Do not act out of impatience to enter or exit.
15 Avoid the small gains and large losses.
I think that the limit should be at least 2 times bigger than the stop
16 Never cancel a stop loss.
17 Go in the direction of the trend.
18 Avoid to enter and exit the market too often.
19 Do not buy just because the price is low.
21 Avoid making inverted pyramids.
22 Treat each value separately.
23 Do not change your mind without good reason.
24 Do not increase your bets after a period of earnings
Please feel free to comment those rules.
Do you apply them?
Are their some rules that you don’t apply? And why?
Can you suggest more rules?
1 Never risk more than 10% of the capital on every position. ”
10% on a single trade is an HUGE RISK. Noone should risk more than 1%-3% on a single trade. If a trading system makes a lot of trades, probably one should risk below 1% per trade.I agree with you. I think that 10% is only for stocks that you are going to keep for years. I only risk 2% on every single trade.
Rule 9 should be the opposite: “Never pay market price, always limit your order.” Otherwise people set your price for you. You yourself should be the one setting the price. The most famous ‘trading horror stories’ (e.g. trading on prices in empty markets, auction cock-ups) could have been avoided by setting a limit.
If you still abide by rule 9, please trade with me in a closed, two-traders game. You can pick the financial instrument. —
Stop Loss orders can be done as Stop Limit and not Stop Market. If your instrument can move fast, the Limit can be higher (or lower) than the Stop.
Also, you can enter the market the same way, by sending a Limit order than is better than the market. You will almost always fill the order and you will not pay any more than the Market order. If there is a thin market and even your generous Limit order did not fill, consider yourself lucky.
regarding rule 9 i think it is speaking about 1cent spreads
but i do not understand rule 12 why “Do not buy just to cash a dividend”
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