1) Trade in the direction of the intermediate trend
2) In uptrends, buy the dips; in downtrends, sell bounces.
3) Let profits run, cut losses short
4) Use protective stops to limit losses
5) Don't trade impulsively, have a plan
6) Plan your work and work your plan
7) Use money management principles
8) Diversity, but don't overdo it
9) Employ at least a 3 to 1 reward to risk ratio
10) When pyramiding (adding positions), follow these guidelines
a. Each successive layer should be smaller than before
b. add only to winning positions
c. Never add to a losing position
d. adjust protective stops to the breakeven point
11) Never meet a margin call, don't throw good money after bad
12) Close out losing position before the winning ones.
13) Except for very short term trading, make decision away from the market, preferably when the markets are closed.
14) Work from the long term to the short term
15) Use intraday charts to fine-tune entry and exit
16) Master inerday trading before trying intraday trading.
17) Try to ignore conventional wisdom, don't take anything said in the financial media too seriously
18) Learn to be comfortable being in the minority. If you are right on the market, most people will disagree with you.
19) Technical analysis is a skill that improves with experience and study. Always be a student and keep learning.
20) Keep it simple, more complicated isn't always better.
TECHNICAL CHECKLIST
1. What is the direction of the overall market?
2. What is the direction of the various market sectors？
3. What are the weekly and monthly charts showing?
4. Are the major, intermediate, and minor trends up, down or sideways?
5. Where are the important support and resistance levels?
6. Where are the important trendlines or channels?
7. Are volume and open interest confirming the price action?
8. Where are the 33%, 50%, and 66% retracements?
9. Are there any price gaps and what type are they?
10. Are there any major reversal patterns visible?
11. Are there any continuation patterns visible?
12. What are the price objectives from these patterns?
13. Which way are the moving average pointing?
14. Are the oscillators overbought or oversold?
15. Are any divergences apparent on the oscillators?
16. Are contrary opinion numbers showing any extremes？
17. What isthe Elliot Wave pattern showing?
18. Are there any obvious 3 or 5 wave patterns?
19. What about Fibonacci retracements or projections？
20. Are there any cycle tops or bottoms due?
21. Is the market showing right or left translation?
22. Which way is the computer trend moving: up,down, or sideways?
23. What are the point and figure charts and candlesticks showing?
After you arrive at a bull or bear conclusion, ask yourself the following question:
1. Which way will this market trend over the next several months？
2.Am i going to buy or sell this market?
3. How many units will i trade？
4. How much am i prepared to risk if i am wrong?
5. What is my profit objective?
6. Where will i enter the market?
7. What type of order will i use?
8. Where will i place my protective stop?
