Tuesday, November 21, 2006

Trading Aphorisms

Trading advice naturally comes in aphorisms. I've collected a few here, though I don't know who originally said them. You've probably heard these before. Most just make sense and are good reminders when you start second guessing and psyching yourself out. I've certainly experienced that. A few are debatable depending on your trading style and need entire books to explain.
  • Buy low, sell high.
  • Buy high, sell higher.
  • The trend is your friend.
    • The trend is your friend until the end where it bends.
  • A rising tide lifts all boats.
  • Don't try to catch a falling knife. Pick it up off the floor.
  • Volume goes with the trend.
  • Manage your money well.
  • Control risk.
  • Take big profits.
  • Take small losses.
  • Don't turn a profit into a loss.
  • Don't add to a loss.
    • Losers average losers.
  • Don't overtrade.
  • Preserve your capital.
  • Never invest all your funds. Keep liquid.
  • Learn how to use orders properly.
  • Trade liquid markets.
  • Fully understand your motivation to trade.
  • Avoid the crowd.
  • Buy the rumor, sell the news.
  • Don't argue with the market. The market is always right.
  • Avoid fear and greed.
  • Don't buy or sell price alone.
  • Develop strategies that work for you and fit your personality.
  • Hard work is essential.
  • It has to be fun.
  • Assume personal responsibility for all market actions.
  • Establish a clear, precise plan of action.
  • Ignore the noise; follow the signal.
  • Patience is your edge.


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