Trade rules by Jack Schwager


19. If you sell (buy) at the level of resistance (support) and market consolidation, rather than turn around - get out of the deal.

20. For analysts and money managers: if you feel that your previous recommendations, transactions or reports are wrong, - change your opinion!

21. If you can not watch the markets for a period of time (say, traveling) - or liquidate all positions, or make sure that for all open positions posted operating stop orders. (In addition, in such situations, use limit orders to ensure the entry of the planned purchases at low or c-planned sales at high prices.)

22. Do not relax, having an open position. Always know where you will be out of the market, even if this point is far from the current price. In addition, the emergence of the figure, unfavorable to your transaction, may suggest the desirability of an earlier than planned, exit the trade.

23. Resist the temptation to return to the market immediately after fixation losses in the performance of protective stops. Such a return will usually result in an increase of the initial loss. The only reason to go back to the previously stopped the transaction may consist of significant changes in the market (the emergence of new models), ie if all of the conditions justifying any new deal.

Other rules

24. When the trade goes bad: (a) reduce the size of the position (remember that the position of strongly correlated markets is like one big position), (b) use a similar defensive stop, and (c) not to start new transactions.

25. When the trade goes bad, reduce risk by eliminating unprofitable and not winning positions. This observation was also made by Edwin Lefevre in his "Memoirs of speculators": "I did absolutely the wrong thing. I kept losing position on cotton and closing a profitable position in wheat. There is nothing worse than trying to averaging a losing position. Always cover the losing trades, keeping the position shows a profit. "

26. Please be careful not to change the methods of trading after profit: a. Do not start any trade which would have seemed too risky at the beginning of the trading program. b. Do not increase the number of contracts unexpectedly in a typical transaction. (However, a gradual increase in the growth of assets is normal.)

27. Acceptance of small items with the same common sense as to large. Never say, "It's only one or two of the contract."

28. Do not hold very large positions at the time of the publication of important economic data and government statistics.

29. When trading spreads should apply the same principles of risk management in the case of one-sided positions. It's easy to relax at the thought that the spreads are moving slowly enough and therefore there is no need to worry about protective stops.

30. Do not buy options without having to plan, at what price the underlying transaction will be eliminated.

Retention of profitable positions and exit

31. Do not fix a small quick profit on transactions in the direction of the main trend. In particular, if you are absolutely sure of the deal, never lock the profit in the first day.