20 Rules for Effective Trade Execution
It's easier to find good stocks than to trade them for a profit.
1. Seek favorable conditions for trade entry, or stay out of the market until they appear. Bad execution ruins a perfect setup.
2. Watch the tape before you trade. Look for
evidence to confirm your opinion. Time,
crowd and trend must support the reversal,
breakout or fade you're expecting to happen.
3. Choose to execute or to stand aside.
Staying out of the market is an aggressive
way to trade. All opportunities carry risk,
and even perfect setups lead to very bad
4. Filter the trade through your personal
plan. Ditch it if it doesn't meet your risk
5. Stay on the sidelines and wait for the
opportunity to develop. There's a perfect
moment you're trying to trade.
6. Decide how long you want to be in the
market before you execute. Don't daytrade an
investment or invest in a swing trade.
7. Take positions with the market flow, not
against it. It's more fun to surf the waves
than to get eaten by the sharks.
8. Avoid the open. They see you coming,
9. Stand apart from the crowd. Its emotions
often signal opportunity in the opposite
direction. Profit rarely follows the herd.
10. Maintain an open mind and let the market
show its hand before you trade it.
11. Keep your hands off the keyboard until
you're ready to act. Don't trust your
fingers until they move faster than your
brain, but still hit the right notes.
12. Stand aside when confusion reigns and
the crowd lacks direction.
13. Take overnight positions before trading
the intraday markets. Longer holding periods
reduce the risk of a bad execution.
14. Lower your position size until you show
a track record. Work methodically through
each analysis, and never be in a hurry.
15. Trade a swing strategy in range-bound
markets and a momentum strategy in trending
16. An excellent entry on a mediocre
position makes more money than a bad entry
on a good position.
17. Step in front of the crowd on pullbacks
and stand behind them on breakouts. Be ready
to move against them when conditions favor a
18. Find the breaking point where the crowd
will lose control, give up or show
exuberance. Then execute the trade just
before they do.
19. Use market orders to get in fast when
you can watch the market. Place limit orders
when you have a life outside of the markets.
20. Focus on execution, not technology. Fast
terminals make a good trader better, but
they won't help a loser.