Archive for the ‘Trading Plan, System & Rules’ Category

Trading Rules that I Adhere To

October 16th, 2013 No comments

Here's the trading rules that I follow when comes to pure trading (as compared to investing):

* Capital management: each position should not risk more that 2% of total investible capital.

* If a position already in profit, avoid allowing it to slip into negative.

* Keep the number of open position to a manageable number for yourself.

* Set strict cutloss. Position risk management: Do not risk more that 7-8% of each trade position (this 7-8% of the trade position has to be lower than % of capital cutloss). Follow it religiously.

Important: At initiation of position – must know exactly where is the cutloss point.

* If have no conviction of the trade but still want to proceed, always trade small(er).

* Wait patiently for the best possible entry points.

* Always trade in the direction of the major trend (trend is your friend).

* Averaging:
Never ever average down. Only average up – either in same size or reducing size (in dollar value).

After adding position, must know what is your weighted average cost and where is your trailing stop – and execute accordingly when time comes. No thinking, just act according to plan.

* Let winners run, cut losses short. (i.e. Keep losses small, and have big winners).

* Discretionary: Great traders reduces their trade size when things are not happening in their favor and increases (note: use with care and perhaps gradually, depending on your skill level) their trade size when they trade well.

Side note: On averaging down, I restrict myself to not average down except for dividend paying, quality blue chips counters and at far enough prices.

Always make sure to manage risk, trade safe and well 😉

Good Luck

A Quote from Jesse Livermore

September 6th, 2013 No comments

A trader's perspective:


A Matter of Perspective – Technician vs Fundamentals

December 5th, 2012 No comments

"I haven't met a rich technician"

~ Jim Rogers

"I always laugh at people who say "I've never met a rich technician" I love that! Its such an arrogant, nonsensical response. I used fundamentals for 9 years and got rich as a technician"

~ Marty Schwartz.

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