John Welsh Top 10 Trading Rules To Follow

ppteam

One of my stocktwits/twitter goals, besides posting real time entry and exit trades for followers to learn from (Which very few do by the way), is to share trading experience guidelines for help.

These guidelines, or more like rules, are taped right on the wall next to my computer when I trade.  I follow these rules, I try not to break them, or I lose money.  That simple.  Compiled over the years of trading, and order no importance.  I try and follow them all.  Your welcome.

1) NO TRADING ONCE THE DAYS LOSSES EXCEED XXXX.XX.  (Insert your dollar amout)  I find myself, when a get a loss over 5,000 dollars, I chase that loss, and ending up LOSING more money than the originial trade.  Trading frustrated is no way to trade.

2) DO NOT OVERTRADE.  Simply mathematics…the more high frequent trades I make, the more I get out of control, the more long term profits I end up losing.

3) NO TRADING THE SAME STOCK AFTER TAKING A LOSS THAT IN THE STOCK ALREADY THAT DAY.   Using a real life YRCW short example lets say, shorted 10k at 5.17 a few months ago, stopped out 5.42, lost 2.5k.  I Honestly think this stock is an absolute pig, and wanted to reshort it badly, but I did not due to my rule, and YRCW ended up going over 6 that day.

4) THE MORE STUBBORN YOU ARE, THE MORE YOU WILL LOSE.  THE STOCK MARKET IS ALWAYS RIGHT.

5) NO TRADING OF PINK SHEETS OR .OTCBB STOCKS.  I bring this up because everyone says “I missed VRMLQ.PK run.  Well, for every VRMLQ.PK run, I have seen thousands, and I mean thousands of pink sheet or .otcbb stocks scams.

6) ALWAYS SET YEARLY AND MONTHLY TRADING GOALS, AND NEVER LOOK AT A DAILY CHANGES IN ACCOUNT.  No one will be right everyday, impossible.  But over time, months, year, years, you will see what your true success rate is.  This is most important, there will ALWAYS BE BAD TRADES.  I guarantee it.

7) DON’T CHASE STOCKS JUST TO DO A TRADE.  AVOID BOREDOM TRADES.  IF NO TRADE IS THERE, PASS, AND SOMETIMES DON’T TRADE ANY STOCKS AT ALL.

8)  TRY TO GET IN BEFORE THE HEADLINES INSTEAD OF BUYING THE HEADLINES.   Market homework absolutely required to be a success.

9) NEVER, EVER TRADE OVERNIGHT/EARNING PLAYS ON MARGIN.  No swing long or swing short trades on margin.   Shorting itself requries margin, but if I short long term it’s in small size compared to account balance.  I NEVER hold overnight on margin, EVER, no exceptions.

10) SHRUG OFF ALL LOSSES IF RULES ARE FOLLOWED.  It’s the trades when rules are broken that bother me, which is rare.  If rules are followed, I learn from the loss, but move quickly to the next opportunity.

ppteam

1. should never happen
2. depends
3. what about only trade emini index futures?
4. yes
5. N/A
6. I do check every day, winning everyday makes me happy
7. no chasing. right
8. N/A
9. yes.
10. yes