Three Trading Rules

It has cost me a huge amount of money to formulate these "trading laws", if you will, and I offer them up - as I do everything on this blog - for free, with the hope that it will help some of you. If one day I can follow these three rules absolutely consistently, I'll be a much better trader for it.
 * Never Lack a Stop Price - The moment I have bought into a position, I immediately whip right around and set a stop price. There is no delay. Always have a stop price in place for every single position (based, naturally, on good charting). No exceptions. For options, using a contingent stop.

* Never Do an Ad Hoc Close - So what's with the Latin, Tim? OK, four years of high school foreign language has got to come in handy somewhere, right? But seriously, this is my most important rule, and what it means is simply this - don't close on a spur of the moment decision. There are two things that should do your closes for you: (1) a stop price (2) the successful achievement of a pre-determined target price. Impulsively jumping out of a position almost never works to your favor.

* Never Act in the First Thirty Minutes - There's something weird about the first thirty minutes of the trading day. Just trust me on this. Do nothing. No opens. No closes. No nothing. Your stops should be in place, and they can do their job, but for you - follow this new spin on old saying: Don't Just Do Something! Sit There!

Slope of Hope with Tim Knight

Blogged with the Flock Browser