Go back to Part 1: Trading Psychology
TRADING SYSTEM & MONEY MANAGEMENT
7. Never, under any circumstance add to a losing position.... ever!
Nothing more need be said; to do otherwise will eventually and absolutely lead to ruin!
8. Trade like a mercenary guerrilla.
We must fight on the winning side and be willing to change sides readily when one side has gained the upper hand.
9. The objective is not to buy low and sell high, but to buy high and to sell higher.
We can never know what price is "low." Nor can we know what price is "high."
Always remember that sugar once fell from $1.25/lb to 2 cent/lb and seemed "cheap" many times along the way.
10. In bull markets we can only be long or neutral, and in bear markets we can only be short or neutral.
That may seem self-evident; it is not, and it is a lesson learned too late by far too many.
11. Sell markets that show the greatest weakness, and buy those that show the greatest strength.
Metaphorically, when bearish, throw your rocks into the wettest paper sack, for they break most readily.
In bull markets, we need to ride upon the strongest winds... they shall carry us higher than shall lesser ones.
12. Do more of that which is working and less of that which is not.
If a market is strong, buy more; if a market is weak, sell more.
New highs are to be bought; new lows sold.
13. Trading runs in cycles: some good; most bad. Trade large and aggressively when trading well; trade small and modestly when trading poorly.
In "good times," even errors are profitable; in "bad times" even the most well researched trades go awry. This is the nature of trading; accept it.
14. Be patient with winning trades; be enormously impatient with losing trades.
Remember it is quite possible to make large sums trading/investing if we are "right" only 30% of the time, as long as our losses are small and our profits are large.
15. To trade successfully, think like a fundamentalist; trade like a technician.
It is imperative that we understand the fundamentals driving a trade, but also that we understand the market's technicals. When we do, then, and only then, can we or should we, trade.
To be continued to Part 3: Technical Trading System
Related Articles:
* FREE Trading Educational Resources You Should Not Miss
* Trading System: What Is It and Is It Important?
* Why Being Right In Your Trading Does Not Necessarily Mean Making Money
* The Psychological Need To Be Right vs. Making Money
* The Fear Of Losing Money
Saturday, October 18, 2008
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» GARTMAN’S RULES OF TRADING – Part 2: Trading System & Money Management
2 comments:
I was wondering how long have you been trading and who did you learn from?
You have a lot of great information here.
Hi PW,
Thanks for the kind words. :)
I've been trading for about 2 yrs, but has been on & off for over the past half a year due to my medical condition. So, I’m still really a beginner in trading. :)
At first, I learnt trading by taking a course, but found it not useful for me.
But since trading has become my passion, I continued to learn on my own by reading books & many articles from the internet.
When I’m learning something, I always try to understand & make sense how it actually works.
I’ve encountered many obstacles & taken a long times when trying to understand certain things, as I have to go to research many sources. I suppose many people would experience the same too.
That’s why I decided to write articles in my blog to share about my understanding of what I learnt, with the hope that it can help those who are learning too.
I also try to share what I learnt about the complex concepts in a simpler way & easier to understand.
Glad if you find it useful… :)
Regards,
OTB
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