Trading Rules

Trading Rules
1. Buy between 1:30pm and 2:15pm

Rationale: This is the time when stocks pullback and make room for the big money that is coming from bond traders. FYI: Bond markets close at 2pm

2. Trade with the general direction of the Market(Dow Jones Industrial Average)

Rationale: The trend is your friend. Never go against it, chances are that you will lose

3. Always use Limit orders to buy and Stops/Trailing Stops to sell(20%)

Rationale: (a)Limits let you determine the price that you are willing to pay for a particular security/option. Never leave that decision up to the market maker.
(b)Setting stops ensures that you never lose too much on a trade. You will always know ahead of time how much you stand to lose if the trade moves against you.

4. If I am up more than 20% in a trade then reset my stop to cost basis and move up for every 20% gain thereafter

5. 100% trumps all previous rules. If you are up 100% or greater then set a 5% stop and let the trade play out.

6. Dont dwell on losses, it will affect your moral in future trades

7. After two losing trades in a day, STOP TRADING!

Rationale: When on a losing streak, traders tend to become emotional and want revenge on the market/a particular stock.

8. Leave Fear and Greed at the door, Patience is Welcomed.

9. Always use indicators to signal an entry/exit point(5ema/10sma, Stochastics)
(a) Have an entry and exit plan before making a trade.

10. Always follow the rules!!!

Note: These rules may change over time depending on my strategy, but always follow them.