My 2011 Trader Playbook (Same As the Old One)

The game taught me the game.  And it didn’t spare me rod while teaching. -Jesse Livermore

The new year is upon us and it is time to get serious again. 2010 was a phenomenal year for the bulls, as we continued the rally from the abyss of 2008. Many folks were eviscerated during the crash, many will never come back, so I speak to those of you that are still fighting the good fight and are trying to master the game that is trading. Maybe it’s rigged, maybe it isn’t, but if you choose to play the game and to , here are some ideas that may help. I have made every mistake humanly possible, they happen, just try not to make the same one twice. These are pointers that I personally try and follow daily. Have a great and profitable 2011.

1-Try your best to stay away from the market for the first 15-25 minutes, I call that period the “wild wild west”, you will usually get a better price if you wait for the dust to settle, that goes for longs and shorts. My experience tells me that you will get a better entry if you are patient, strong stocks usually pull back to a more ‘buyable’ level, same with short ideas. I only use strong opens (up or down) to take profits (sell or cover)

2- Follow the tape and trade what is in front of you. Economists and pundits never traded and they are usually wrong. Put them on mute.

3- Don’t EVER buy a ‘tip’, it’s like borrowing someones Chapstick, you don’t know where it started.

4- JP Morgan said ” I will never buy at the bottom or short at the top, but I will make my money in that 60% area” I feel the same way.

5- I don’t chase stocks and I rarely if ever average down. Small losses are cool.

6- Ride the market’s coattails. Never try to out think it. The market is the one place where following trends and not making them is cool.

7- Trade with stops or don’t trade.

8- Don’t let a gain turn into a loss. Sell pieces on the way up, your in the market to monetize, not to cheer a winner.

9- Raise your stops always, as price moves in your favor.

10- Trade a few stocks well, if you need to have a basket of names every day, go buy a mutual fund.

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