Trade rules by Jack Schwager


Jack Schwager - the author of the well-known best-sellers in the West «Market Wizards» and «New Market Wizards», in which he summarized the experience of the best traders and most successful investors.

Schwager's first book, published in Russian, was the 800-page tome "Technical analysis. Full course ", released last year by the publishing house" Alpina Publisher. " In his book Schwager included and the quintessence of wisdom of the market - advice to traders. Courtesy "Alpina Publisher" We publish tips in a slightly abridged version of the log

Start of Trading

1. A distinction is made between transactions in line with the important long-term and short-term position trades. Medium risk for short-term transactions (number of contracts implied in the position and the exit point) should be much smaller. In addition, the speculator should focus on long-term trading positions, as they are usually much more important to the success of trade. Mistakes made by many traders, is that they are so immersed in trying to catch short-term fluctuations in the market (making a lot of fees and slippage), which misses the point of price movement.

2. If you believe that there is a long-term trading opportunity, do not fall into the greed of trying to reach a slightly better opening price position. Probable loss of profit from the price movement of one of lost profits can cover from 50 bit best price execution.

3. Opening any long positions should be planned and carefully considered - it should never be immediate impulse.

4. Find the graph model, which says that it is now time to open a position. Do not initiate a transaction without confirming this figure. (Sometimes, you can consider a deal without such figures, if there is a convergence of many of the measured movements and support / resistance levels in this price area and a well-defined stop point, does not imply a high risk.)

5. Place orders by determining their levels with the daily analysis. If the market comes close to the desired level of trade opening, record trading idea and revise it every day for as long as the position is open or cease trading idea seem appealing. Failure to follow this rule can lead to missing good deals.

One of the common reasons is that the idea of the trade recall, when the market was already gone from the beginning of the implied price of the transaction, and then it is difficult to make the same deal to the worst price.

6. When looking for large-scale trend reversal should wait for any topping formations, and not take a position against the trend to target levels or lines of support / resistance. This rule is particularly important in the case of the market, which had been achieved long-term highs / lows (eg, high / low price range beyond the previous one hundred days). Remember that in most cases the duration of the market trend reversals will not generate V-type. Instead, the prices will go back many times to re-test the highs and lows. Thus, the expectation of the formation of topping formations can prevent the exchange on small things during the process of formation tops or valley, not to mention the losses that may occur when the trend resumes. Even if the market really forms an important V-top or V-trough, the subsequent consolidation (eg, flags) can give positive attitude profit / risk to the opening position.