Trading Rules

These are trading rules I have adopted over the past 3 years and I find my self to be much more profitable when I follow these rules. When I break them, I tend to have losses. Some of these rules I have adopted from experienced traders and have found them to be very effective once tuned to fit my own style. I continue to add, review and expand my rules as I find neccessary.

Trading Rules:

1) DO NOT trade before 10:00am. I wait until the market settles and I can determine the direction it chooses to move in. I usually end up loosing when I open a position between 9:30 - 10:00am due to the volatility and erratic moves during this time.

2) ALWAYS USE A STOP LOSS. This one always gets me... Its better to have a small loss than to take a big hit! I should always place a stop immediately after entering a position.

3) DO NOT OVERTRADE. Overtrading causes me to loose focus and I find my self breaking even or even losing $$.

4) DO NOT let a profit turn into a loss. Take profits no matter how small. Profit is Profit!

5) DO NOT do earnings plays (unless it is an options strategy and even then, keep it small)! Ive gotten burnt on a few but also have made good money on a few, but its best to avoid them.

6) I DO NOT trade anymore for the day when my losses exceed $300.00

7) Close out all positions at the End of Day unless the trade is a swing trade. I want to be mostly CASH. Day trades are Day trades.

8) Don't trade stocks just to trade. If there is no trade, there is no trade. Like my grandma used to say "If you don't have anything good to trade, then don't trade anything at all".. no, wait... You DO NOT have to trade every day! If you feel the market is choppy or just not feeling it, DO NOT TRADE! If anything trade smaller share or contract sizes.

9) DO NOT trade the same stock after having taken a loss on it that day. I will start to take it personally, chase it and end up loosing more on it.

10) Never commit more than your 20% of your trading capital on any given trade. Never!

11) Scale In, Scale Out. When trading Options, start small leaving room to avarage down. Options are more volatile and experience bigger % moves do to the levearage they provide. this call also be applied to Stocks but it would depend on the strategy.

12) Avoid Pink sheets and OTC stocks. There are very few exceptions but most of them are scams (pump and dump). Once in a while I disobey my rule and do buy one (ex. CMSI), but its basically a pure speculation play and I play it extremely small.