• Understand why you are in the markets. Gambling thrill or to make money?
• Use an approach and don't deviate from it.
• Use money management at all times.
• Establish a trading plan before the markets open.
• Have a detailed plan for each trade.
• Have entry and exit points and understand risk reward rations.
• Learn to accept many small losses.
• Trade markets from the short side.
• Standing aside from a position is a position.
• Have a strong relationship with your broker.
• Speculation is a business. Develop a business plan.
• Survive to hang around for the big moves.
• Don't blame the market for your losses. You are the sole reason for losses.
• Write out a trading plan for all potential situations you may face.
• Do not look at quotes during the day.
• Do not concentrate on break-even levels when you are losing.
• Break-even levels have no bearing on the future success of a position.
• Don't liquidate a winner to keep a loser.
• Develop and maintain an exit plan. Follow this plan with rigid discipline.
• Greed kills.
• Never add to a losing position. A losing position means you are wrong.
• Big movements take time to develop. Stay patient.
• Nothing new ever occurs in the markets.
• Don't try to predetermine your profits.
• The key to wealth in trading is simplicity. Avoid techniques you don't understand.
• Don't be overly curious about the rationale behind a move.
• Trade your money not the markets.
• Bulls and bears make money, pigs get slaughtered.

Food for Thought

1. Does the 60% drop in NASDAQ stocks mean the bull market has finally run its course? We don’t know, and neither do you. Don't worry about what the markets are going to do, worry about what you are going to do in response to the markets. You cannot predict future prices. No one consistently can predict anything. Prices, not investors, predict the future.
2. Meticulous risk management strategies are absolutely crucial. Everyone makes money in a bull, but if you don't have a money management plan along the way and an exit plan, you are in trouble when the day of reckoning arrives. Trend followers know when they will get out before they ever get in. They are interested in primarily one variable: price. Forget forecasts, fundamental factors, technological break throughs, the main factor is the price of the market.
3. Inefficiencies exist in a variety of financial markets around the world that lead to sustained trends. Mechanical trading systems exploit these for big profits. With markets globally in various stages of expansion and equilibrium, a trading strategy must adapt.
4. Know every day what your portfolio is worth. Calculate what your risks are on any given day for all positions.
5. Don’t leave stop losses in the market. Mental stops are key.
6. Controlling risk is not the same thing as avoiding risk. If managing risk is an integral part of your philosophy, when it changes up or down, you simply adjust.
7. Position liquidations are triggered by significant adverse price action and never at pre-determined objectives. Concentrate on managing the risk. The returns will take care of themselves.
8. If you are flush with profits you trade in larger size. If you are thinly capitalized you have to cut back. Likewise with risk control. If your stop is very tight, you can put on more contracts at the same level of dollar risk than if your stop is very wide.
9. Equalized risk means that a fixed dollar amount of risk is allocated to each new position so that for example a corn position will have the same initial dollar risk as a T-Bond position. By trading a system with the same parameters for all markets you protect against when a system works well on historical data, but fails in real time.
10. You cannot expect to enter a market at the precise moment a bottom is hit, nor will you exit a market at the exact top.
11. Seek profit opportunities in trending markets, whether those markets are moving up or down.
12. Obtaining profits from long-term volatility manifested in major price dislocations is the cornerstone of good trading systems.
13. The objective is not to attempt to buy lows and sell highs, but rather to buy market strength and sell market weakness