20 Golden Rules for Traders
Add these simple rules to your daily trading and build consistent profits.
1. Forget the news, remember the chart. You're not smart enough to know how news will affect price. The chart already knows the news is coming.
2. Buy the first pullback from a new
high. Sell the first pullback from a new
low. There's always a crowd that missed
the first boat.
3. Buy at support, sell at resistance.
Everyone sees the same thing and they're all
just waiting to jump in the pool.
4. Short rallies not sell offs. When
markets drop, shorts finally turn a profit
and get ready to cover.
5. Don't buy up into a major moving
average or sell down into one. See #3.
6. Don't chase momentum if you can't find
the exit. Assume the market will reverse
the minute you get in. If it's a long way to
the door, you're in big trouble.
7. Exhaustion gaps get filled. Breakaway
and continuation gaps don't. The old
traders' wisdom is a lie. Trade in the
direction of gap support whenever you can.
8. Trends test the point of last
support/resistance. Enter here even if
9. Trade with the TICK not against it.
Don't be a hero. Go with the money flow.
10. If you have to look, it isn't there.
Forget your college degree and trust your
11. Sell the second high, buy the second
low. After sharp pullbacks, the first
test of any high or low always runs into
resistance. Look for the break on the third
or fourth try.
12. The trend is your friend in the last
hour. As volume cranks up at 3:00pm
don't expect anyone to change the channel.
13. Avoid the open. They see YOU
14. 1-2-3-Drop-Up. Look for
downtrends to reverse after a top, two lower
highs and a double bottom.
15. Bulls live above the 200 day, bears
live below. Sellers eat up rallies below
this key moving average line and buyers to
come to the rescue above it.
16. Price has memory. What did price
do the last time it hit a certain level?
Chances are it will do it again.
17. Big volume kills moves. Climax
blow-offs take both buyers and sellers out
of the market and lead to sideways action.
18. Trends never turn on a dime.
Reversals build slowly. The first sharp dip
always finds buyers and the first sharp rise
always finds sellers.
19. Bottoms take longer to form than
tops. Fear acts more quickly than greed
and causes stocks to drop from their own
20. Beat the crowd in and out the door.
You have to take their money before they
take yours, period.