- Trend following by its very nature is a system that needs to be adhered to. There is no point in adopting a trend following strategy and then, if you think that the market may be beginning to move, changing the way that you trade. But trend following is following, it is not a way of knowing what the market will do. If it were that then there would be no market as everyone would invest in the same thing and there would be no profit in trading.
- Trend following is a way of analyzing risk based on the trend that you are following. It is a way of working out what you should be investing in based on the current trend of that stock and also what price you should be paying. This is called the initial risk rule. Trend following is not a fashionable way of trading that is being followed for a while until the next big thing happens along. Trend following is a good solid and reliable way of trading that should, if your analysis and application are good, be a reliable way to make a profit. Of course there will also be times when you lose out, but on the whole trend following has been shown to be a good system.
- One of the most important things in getting it right, is knowing how much you should trade for the trend that you are following. You also need to trade in the context of the market at the time. If the market is unstable and there are large shifts in prices, then it might seem to be a good time to make a good profit, but it is just as easy to lose a lot of money and it is generally best to make smaller trades in this type of market. To make trend following work for you, you need to work out when it is best for you to start to trade, how much money you should risk, the best way to sell quickly if the prices drop and when to sell if the prices rise so that you make your profit before the market starts to turn.
- Trend following is not a way to quick profits, it is good basic trading and you need to know what the real value of the company that you are buying is, how much it is rising and why that trend might continue. If you follow the data that your analysis gives you and do not change you mind when the trend following system is working, then you are quite likely to do well.
http://www.nostresstrading.com
Wednesday, December 17, 2008
Saturday, December 6, 2008
Mark Crisp's 10 Golden Stock Trading Rules
1) I MUST FOLLOW my rules.
2) Never risk more than 3% of my total portfolio no any one stock trade. There are many old traders. There are many bold traders. But there are never any old bold traders.
3) Cut my losses 5% to 15% when I am wrong without question.
4) Never set price targets. Simply let those profits run. I can never pick tops. Never feel a stock has risen too high too quickly. Be willing to give back a good percentage of profits in the HOPE of much bigger profits. The big money is made from trading the really BIG moves that I can occasionally catch
5) Keep learning and getting better at THIS ONE METHOD of trading. Never jump from one trading style to another. Master one style rather one than be competent in several.
6) Never listen to any opinion about the stock market or individual stocks you are going to trade or are trading. Everything is reflected in then price and volume.
7) Take all valid signals that show up. If an entry signal shows up you have no excuse not to take it.
Never trade from intra-day data. This can cause some wrong decisions.
9) Successful stock trading isn’t solely about trading. It’s also about emotional strength and physical fitness. Reduce the stress every day by taking time off the computer and working on other areas. A stressful trader will not make it in the long term.
10) In order to succeed in the stock market you don’t need to do anything exceptional you simply need to Not DO WHAT THE AVERAGE TRADER DOES. Ask your-self every day…did I follow my method today? Answer no and you are in trouble.
www.nostresstrading.com
2) Never risk more than 3% of my total portfolio no any one stock trade. There are many old traders. There are many bold traders. But there are never any old bold traders.
3) Cut my losses 5% to 15% when I am wrong without question.
4) Never set price targets. Simply let those profits run. I can never pick tops. Never feel a stock has risen too high too quickly. Be willing to give back a good percentage of profits in the HOPE of much bigger profits. The big money is made from trading the really BIG moves that I can occasionally catch
5) Keep learning and getting better at THIS ONE METHOD of trading. Never jump from one trading style to another. Master one style rather one than be competent in several.
6) Never listen to any opinion about the stock market or individual stocks you are going to trade or are trading. Everything is reflected in then price and volume.
7) Take all valid signals that show up. If an entry signal shows up you have no excuse not to take it.
Never trade from intra-day data. This can cause some wrong decisions.
9) Successful stock trading isn’t solely about trading. It’s also about emotional strength and physical fitness. Reduce the stress every day by taking time off the computer and working on other areas. A stressful trader will not make it in the long term.
10) In order to succeed in the stock market you don’t need to do anything exceptional you simply need to Not DO WHAT THE AVERAGE TRADER DOES. Ask your-self every day…did I follow my method today? Answer no and you are in trouble.
www.nostresstrading.com
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