When buying, focus on getting the maximum number of shares.
Nothing else matters because you are buying at the bottom and the value of the shares will increase in time.
When selling, focus on getting the maximum amount of cash.
Selling at the top will maximize your profits and puts you in a comfortable position to see your shares value increase.
Do NOT buy when the market is going down.
Because you never know how far it will go.
Always buy when the market is going up, after it has been down for awhile.
The pendulum always swings the other direction over time.
Never chase-down a stock.
Let the stock come to you.
Always ride-up a stock.
Because that is the direction you want to go.
Respect the price action but never defer to it.
Our eyes are valuable tools when trading but if we deferred to the flickering ticks,
stocks would be "better" up and "worse" down and that's a losing proposition.
Discipline trumps conviction.
No matter how strongly you feel on a given position, you must defer to the principles
of discipline when trading. Always attempt to define your risk and never believe that
you're smarter than the market.
Opportunities are made up easier than losses.
It's not necessary to play every day; it's only necessary to have a high winning
percentage on the trades you choose to make. Sometimes the ability not to trade
is as important as trading ability.
Emotion is the enemy when trading.
Emotional decisions have a way of coming back to haunt you. If you're personally
attached to a position, your decision making process will be flawed. Take a deep
breath before risking your hard earned coin.
Zig when others Zag.
Sell hope, buy despair and take the other side of emotional disconnects (in the context of
controlled risk). If you can't find the sheep in the herd, chances are that you're it.
Adapt your style to the market.
Different investment approaches are warranted at different junctures and applying the right
methodology is half the battle. Identify your time horizon and employ a risk profile that allows
the market to work for you.
Maximize your reward relative to your risk.
If you're patient and pick your spots, edges will emerge that provide an advantageous
risk/reward profile. Proactive patience is a virtue.
Perception is reality in the marketplace.
Identifying the prevalent psychology is a necessary process when trading. It's not "what is,"
it's what's perceived to be that dictates supply and demand.
When unsure, trade "in between".
Your risk profile should always be an extension of your thought process. If you're unsure,
trade smaller until your identify your comfort zone.
Don't let your bad trades turn into investments.
Rationalization has no place in trading. If you put a position on for a catalyst and it passes,
take the risk off—win, lose or draw.
