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Your "Best" Trading Rule for Beginners

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johenmo

johenmo

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21 May 2008
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If the experienced could name one rule that they have/stick to that they believe has saved their bacon what would it be.

All comments offered are purely opinion or experience and do not constitute advice, recommendations or such, and are purely for interest sake.

I start this as I have been backtesting and the thing I found (which I didn't apply!!!!! - despite reading it on this forum) is to cut your losses!.

Just fiddling with one system and altering the timing of the exit from 5 days to 20 days took it from 39% profit to 11% loss = 50% difference in outcome.

This was with 21 different stocks (from ASX50) over last 10 years. nOt necessarily a great return - it's the principle that's important.

I had to share this epiphany with someone!!

Hope others can provide something - I see a lot of new posts which show the bewilderment that I am steadily reducing.

Cheers
 
Re: Individual "Best" Trading Rule for Beginners

You don't have to be in the market. Stay out if your edge is not clearly visible.

If you don't know how you are going to get out then you have no business getting in.
 
Im only fairly new to this (1 year) and the biggest thing I have learnt (and more then once aswell) is the importance of a stop loss. If used I would of exited alot of positions with 50-70% profit. Instead I was greedy and ended up with a negative %. That said im still in the game and learning all the time, so always using a Stop Loss would be mine.
 
Don't get emotionally attached to any stock............ Period Sell it and the chances of buying it back at an even lower price are 50/50 and if not there are lots of other "buys" to make gains from :) My:2twocents

PS : Probably I am posting this comments as a reminder for myself as much for anyone else :D (Go Mac Bank :banghead:)
 
2 come to mind for me:

"treat it like a business" (I think it was Tech/A who i first noticed gave this piece of advice somewhere on this forum)

"the next thousand trades" (this one was from Nick Radge)


i suppose they're quotes rather than rules but you get my drift
 
I agree with the thread creator.

Knowing when to exit for me is the most important thing in trading, in such a way that if you get it wrong, you can terminate the trade and/OR, if the situation is right, you can subsequently trade in the other direction.
 
.
Only ever use 2% of your capital for any trade. That way you
can still make 50 bad trades in a row before you finally blow the account. :(
 
Have your exit strategy ready BEFORE you even consider pressing the "buy" button - and stick to it. Rather then trying to chase a trade that went wrong, it's often better to close out of it instead and improve your strategy if necessary, so you can be in a better position for the next trade.
 
my best trading rule:

STOP LOSS
STOP LOSS
STOP LOSS
STOP LOSS
STOP LOSS
STOP LOSS

and for those who missed that

STOP LOSS
 
Always place your stop loss at the same time as you place your trade,
and on no account move it just to give the trade a little more leeway.
 
Well, In my short experience, with small capital ~5K, I have found being tooo tight on your STOP LOSS is bad. Depending on the circumstances.

Consider you buy $2K of stocks, which will cost $40 to buy and sell, which is 2% of your investment. In this market stocks are swining 10-20% both ways in a short-timespan.

I recently bought ANZ at 16.50 odd, which went down to 15ish. I sold at 15.80or so for a loss. A few days later it was 18. And I have other examples. :(

Fair enough, you need an amount which you pull out at, but it should take into the chance of the company going under completely, and the cost of the trade vs your capital, and previous supports.

What I have found to be the most important thing, with small capital, sorry guys, is ENTRY timing. Never buy if you are near a previous resistance level (or very far from the previous support).
 
Hi Jo,
This is from a discretionary view:
Most trades at some time will be in profit - do not let a profit become a loss.

Good entries (tight stops) are just as important as good exits

Be selective with your trades, take only the best

and the most important ----------
Use multi timeframe analysis to determine the underlying structure of your proposed trade, and only take it if the time frames are in alignment
 

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