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COMMON SENSE TIPS FOR TRADERS FROM TRADERS
DOs
- Trade with risk capital only.
- There are only five possible ways a market can move: (1) substantially
higher, (2) slightly higher, (3) nowhere, (4) slightly lower and (5)
substantially lower. Know what action you will take for these 5 scenarios,
you will avoid acting emotionally and/or in haste.
- You need to have a plan, to trade your plan AND TO STICK TO YOUR PLAN.
Include money management, consider risk/reward and the use of stops.
- KNOW WHERE YOU ARE WRONG!
- Learn to accept a loss.
- Stay with your winners; get rid of the losers.
DON'Ts
- Do not be swayed by others' opinions. You are trading markets. A market
is a collection of buyers and sellers. Each participant will have a
reason for his/her action. There are always bulls and always bears,
otherwise it wouldn't be a market.
- Do not spread losing positions
- Do not add to a position for the sole purpose of creating a better
average price.
- Do not get careless after enjoying a period of successful trades.
THOUGHTS
- There is no such thing as a crystal ball; no one has all the answers.
- Be aware that margin = leverage = increased capital risk
- The difference between paper-trading and real is emotion.
- There is no substitute for discipline and patience.
- Actions made out of impatience can disrupt and destroy the value accumulated
as a result of hard work.
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NOTE: These tips and comments were taken from suggestions given
to us by a number of traders and registered commodity futures brokers.
We hope they are helpful but realize that they cannot by themselves
guarantee successful trading results.
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Recommended Reading List
- The Commodity Futures Game: who wins?
who loses? and why? by Richard Jack Teweles
- Market Wizards: Interviews With Top
Traders by Jack D. Schwager (Editor)
- Against the Gods, The Remarkable Story
of Risk by Peter L. Bernstein
- Reminiscences of a Stock Operator
by Edwin Lefevre
- Think and Grow Rich by Napoleon
Hill
- Technical Analysis of the Futures Markets:
A Comprehensive Guide to Trading Methods and Applications by
John J. Murphy
- Elliot Wave Principle: Key to Market
Behavior by Robert R. Prechter, Jr. & A.J. Frost
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