- Do not follow advisory services, newsletters - Do not blindly accept a broker's advice - Do not listen to rumors. - Do not listen to the news about investments and trading. - Do not listen to hot tips.
- Ignore insiders, they are often absolutely the worst judges of their own stock. - Ignore Wall Street sayings, no matter how ancient or revered. - Trade only in highly liquid instruments.
- Make all decisions and plans before the market opens. - Do not change decisions and plans after the market opens. - Make plans for all contigencies, good and bad, pre-market.
- Pyramid up longs, pyramid down shorts, if trade proves right. - Cut losses quickly. If a trade goes against me, get out. - For more than 200 shares, get in, in stages, as the trend proves out. - Let profits ride if there is no good reason to close out the position.
- Set a price stop and a time stop.
- Transfer half of winnings to cash, out of trading accounts, periodically.
- Never overtrade. - Never completely and at once reverse a position. - Run quickly or not at all at the first approach of danger. - When doubtful, reduce the size of the trade. - It is better to average up than to average down. - Public opinion is not to be ignored. - Quiet weak markets are good markets to sell. - In forming opinions, the element of chance should be included.
Sources:
Darvis, Nicolas – “How I Made $2,000,000 in the Stock Market” 1986 Livermore, Jesse – “How to Trade in Stocks” orig. publ. ~60+ years ago Wyckoff, Richard – “Stock Market Technique Number 2” 1934
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