Jesse Livermore - learning in my words. In one of the tweet I have tried to explain one of my profitable Trade Setup, Don’t Miss it:-
01. THERE IS NOTHING NEW IN WALL STREET – Do not waste your time looking for any hidden strategy or magic formula. Things which worked tens of years ago can still work now. Patterns repeat, because human nature hasn’t changed for thousand of year.
02. BUY RISING AND SELL FALLING STOCKS – Define trend first and stick to it like your Life Partner. eg. Mov Avg or Trend Line. Trade only in the direction of It. There is only one side to the stock market and it is not the bull side or the bear side, but the right side.
03. DO NOT TRADE EVERY DAY OF EVERY YEAR – There are thousands of stocks and trade happening every micro second now days. Do not enter just because of fear of missing out (FOMO). Only take best probable trades. Not required to trade every tick. “Control UDAY Control”.
04. TRADE ONLY WHEN THE MARKET IS CLEARLY BULLISH OR BEARISH – Apart from looking at trend of the stock it is important to see overall market and sector direction. All must be Trending in same direction (Except for News based Stock).
05. ONLY ENTER A TRADE AFTER THE ACTION OF THE MARKET CONFIRMS YOUR OPINION – After Breakout wait for retracement. Wait look for halting enter on crossing previous day high or low in case of buy or sell order. Now you have a tight Stop Loss.
06. CONTINUE WITH TRADES THAT SHOW YOU A PROFIT END TRADES THAT SHOW A LOSS – Hold your profitable trades till Trailing Stop Loss is hit. For loosing trades keep stop loss fixed. If break of stop looks very certain or loss is making you uneasy, exit the trade for once.
07. END TRADES WHEN IT IS CLEAR THAT THE TREND YOU ARE PROFITING FROM IS OVER – In case of change in market direction, break of previous swings, etc. exit your position. This needs lot of experience.
08. IN ANY SECTOR, TRADE THE LEADING STOCK – Select the best performing stocks in sector which is trending. Why to go for laggards when you have option to choose the best. We do not do that in our daily life then why in Trading.
09. NEVER AVERAGE LOSSERS – Averaging can be done only if your Stop Loss is not hit and set up is still valid and total position does not exceed your money management rules. Do not average losers below stop loss level.
10. GO LONG WHEN STOCKS REACH A NEW HIGH. SELL SHORT WHEN THEY REACH A NEW LOW – Trade in stocks trading at 52 week or all time high - low. Doing this is very difficult because we prefer any products on sale at discount. This is against our normal habit.
11. DON’T BECOME AN INVOLUNTARY INVESTOR BY HOLDING ONTO STOCKS WHOSE PRICE HAS FALLEN – by holding loss making stocks below their stop loss is like turning trading ideas into loss making Investment which should not be done.
12. MARKETS ARE NEVER WRONG – OPINIONS OFTEN ARE – Market is supreme. It knows everything. “Bhav Bhagvan Che”. So don’t argue with the market. If you take a trade with some analysis but your stop loss is hit. Just Exit, No questions asked.
13. THE HIGHEST PROFITS ARE MADE IN TRADES THAT SHOW A PROFIT RIGHT FROM THE START – for Swing Trades which are in green from day 1 are usually the best performing stocks. Not necessary but it is less stressful.
14. WELL YOU KNOW THIS IS A BULL MARKET – Big money is made if you buy and sit tight in the early stage of bull market. And not in the individual fluctuations.
15. AS LONG AS STOCK IS ACTING RIGHT, AND MARKET IS RIGHT, DO NOT BE IN A HURRY TO TAKE PROFITS – Keep winners running cut losers fast. Book half profit on first target balance SL trailing. It never was my thinking that made the big money for me. It always was my sitting
16. NEVER BUY A STOCK BECAUSE IT HAS HAD A BIG DECLINE FROM ITS PREVIOUS HIGH – A stock which is trading at half the price of previous peak also has a possibility of becoming half again from the current price. Never predict. There must be a reason to buy.
17. NEVER SELL A STOCK BECAUSE IT SEEMS HIGH PRICED – Do not short sell a stock just because it is trading at a very high price. There must be a price confirmation to short sell a stock.
18. THE HUMAN SIDE OF EVERY PERSON IS THE GREATEST ENEMY OF THE AVERAGE INVESTOR OR SPECULATOR – Sticking to your rules, following money management, strategy is the hardest part of trading. This skill must be learned apart from other things.
19. WISHFUL THINKING MUST BE BANISHED – Trade what you see and not what you think. Your price confirmation must agree. On breakout there is retracement, buy on cross of previous day high or low with a stop loss of previous day low or high.
20. BIG MOVEMENTS TAKE TIME TO DEVELOP – That’s why swing trade or positional trades are the less stress full and wealth creating if you follow money management rules properly. What you need to do is sit tight.
21. IT IS NOT GOOD TO BE TOO CURIOUS ABOUT ALL THE REASONS BEHIND PRICE MOVEMENTS – problem with new traders is they wants to know all the reason behind trade. And by the time they find out the reason, move is already happen. Just focus on chart and trade on your confirmation.
22. IT IS MUCH EASIER TO WATCH A FEW THAN MANY – there are thousands of stocks in market. You need to create your watch list which you can monitor comfortably. Trade in them only when you have good Risk Reward and Price Confirmation.
23. IF I BUY STOCK ON SMITH’S TIP I MUST SELL THOSE SAME STOCKS ON SMITH’S TIP. – That’s why Free tip service is not advisable and disastrous if multiple Tip providers are followed.
24. WHAT NEXT - Great Treading Psychology lessons from greatest trader ever. This will definitely help you to become a good trader. For practical trade setups keep following my twitter handle will keep sharing the same as and when I see them. End of Thread!!
