Tips to improve your trading
Here we have listed 39 tips, as described in the book "Trading Habits: 39 of the World's Most Powerful Stock Market Rules" written by Steve Burns & Holly Burns.
- A winning trading system must either be designed to have a large winning percentage, or big wins and small losses.
- Your trading system must be built on quantifiable facts and not opinions.
- Look for low risk, high reward, and high probability setups. – Richard Weissman
- The answer to the question, “What’s the trend?” is the question, “What’s your timeframe? – Richard Weissman
- Start with the weekly price chart to establish the long term trend, and then work down through the daily and hourly charts to trade in the direction of that trend. The odds are better if you’re trading in the direction of the long term trend.
- The more times a support or resistance level is tested, the greater the odds that it will be broken. Old resistance can become the new support, and the old support may become the new resistance.
- Moving averages can quantify trends and create signals for entries, exits, and trailing stops.
- Bull markets have no long term resistance, and bear markets have no long term support.
- The larger the market gaps, the greater the odds of continuation and a trend. – Linda Raschke
- The last hour often tells the truth about how strong a trend truly is. “Smart” money shows their hand in the last hour, continuing to mark positions in their favor. As long as a market is having consecutive strong closes, look for an up-trend to continue. The uptrend is most likely to end when there is a morning rally first, followed by a weak close. – Linda Raschke
- Above the 200 day is where bulls create uptrends. Bad things happen below the 200 day; downtrends, distribution, bear markets, crashes, and bankruptcies.
- It is much easier to watch a few than many. – Jesse Livermore
- Trends never turn on a dime. Reversals build slowly. The first sharp dip always finds buyers and the first sharp rise always finds sellers. – Alan Farley
- Successful trading is about consistently doing the difficult thing so often that it becomes second nature. – Richard Weissman
- The best trades work almost right away. – ArtOfTrading.net
- Wishful thinking must be banished. – Jesse Livermore
- Money is made by discounting the obvious and betting on the unexpected. – George Soros
- A losing trade costs you money, but letting a losing trade get too far out of hand can cause you to lose your nerve. Cut losses for the sake of your nerves and your capital.
- Never trade position sizes so large that your emotions take over your trading plan.
- Trade the market, not the money. – Richard Weissman
- When there’s nothing to do, do nothing. – Richard Weissman
- Trade what's happening...not what you think is gonna happen. – Doug Gregory
- Develop systems based on the kinds of “pain” (weaknesses) endured when they aren’t working or you’ll abandon them during drawdowns. – Richard Weissman
- Remain flexible and go with the flow of the market price action. Stubbornness, egos, and emotions are the worst indicators for entries and exits.
- One thing I have learned over the years trading is that crisis = opportunity. – Dean Karrys
- Going up on bad news or down on good news are among the strongest market tells. – Richard Weissman
- Manage losses and maximize gains.
- The key to long-term survival and prosperity has a lot to do with the money management techniques incorporated into the technical system. – Ed Seykota
- Be disciplined in risk management and flexible in perceiving market behavior. – Richard Weissman
- Position sizing can be correlated to the quality of a trade setup.
- Never lose more than 1% of your total trading capital on any one trade.
- First find the right stop loss level that will show you that you’re wrong about a trade, then set your positions size based on that price level.
- Never lose more than 3% of your total trading capital on your worst day.
- When I am trading poorly, I keep reducing my position size. That way, I will be trading my smallest position size when my trading is worst. – Paul Tudor Jones
- Losers average losers. Never add to a losing trade, you've already been proven wrong.
- Never allow a statistically significant unrealized gain to turn into a statistically significant realized loss. – Richard Weissman
- Understand the nature of instability and adjust your position size for the increased risk due to volatility spikes.
- Place your stop losses outside the range of noise so you’re only stopped out when you’re wrong.
We highly recommend to check out the book, because it will give a thorough explanation of each tip!