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THE 9 TRADING RULES AND PRINCIPLES OF:
Martin S. Schwartz
An independent, legendary trader from the 80's. Winner of the 1984 US Investing Championship.
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Martin S. Schwartz
An independent, legendary trader from the 80's. Winner of the 1984 US Investing Championship.
Thread 👇🏻👇🏻
1. An object in motion will stay in motion
Once price starts trending, there is a good chance that the trend will continue.
Amateur traders always try to call tops & bottoms, although riding the existing trend would often yield much better results.
Once price starts trending, there is a good chance that the trend will continue.
Amateur traders always try to call tops & bottoms, although riding the existing trend would often yield much better results.
2. The Magic T Indicator
Markets spend the same amount of time going up and down.
Refers a ‘T’ because the two lines, left & right to to center line, are equally long.
Below shows the %-share of positive daily closing prices over a one month period for the S&P 500 since 1990.
Markets spend the same amount of time going up and down.
Refers a ‘T’ because the two lines, left & right to to center line, are equally long.
Below shows the %-share of positive daily closing prices over a one month period for the S&P 500 since 1990.
3. Red light / Green light
Whenever price is above the 10 period EMA, he looks for buy trades and when price is below the 10 period EMA, he is looking for short opportunities.
Whenever price is above the 10 period EMA, he looks for buy trades and when price is below the 10 period EMA, he is looking for short opportunities.
4. Don’t put stops below the low and above the high in a range
Amateur and inexperienced traders often use very similar approaches to their stop loss placement which makes it easy to “guess” where the majority of stop loss orders are.
Amateur and inexperienced traders often use very similar approaches to their stop loss placement which makes it easy to “guess” where the majority of stop loss orders are.
5. Understand the news
Surprises and significant deviations from expectations can move the markets.
Data which comes in as expected, usually does not have an effect anymore since market participants already expected it and it has been priced in already.
Surprises and significant deviations from expectations can move the markets.
Data which comes in as expected, usually does not have an effect anymore since market participants already expected it and it has been priced in already.
6. Use a checklist and a trade plan
“I review my checklist. It’s a handwritten sheet and taped to the right-hand corner of my desk where I can’t overlook it.”
“If you have a game plan prepared ahead of time, it can help you find courage in the heat of the battle.”
“I review my checklist. It’s a handwritten sheet and taped to the right-hand corner of my desk where I can’t overlook it.”
“If you have a game plan prepared ahead of time, it can help you find courage in the heat of the battle.”
7. Before putting on a position always ask, ‘Do I really want to have this position?’
Before pulling the trigger, step back and evaluate the trade. Compare it with your checklist and your trade plan.
Are you chasing a trade, trying to play catch up, or trading for excitement?
Before pulling the trigger, step back and evaluate the trade. Compare it with your checklist and your trade plan.
Are you chasing a trade, trying to play catch up, or trading for excitement?
8. “My biggest losses have always followed my largest profits”
During a winning streak, many traders become too confident, believe that they suddenly can’t fail anymore and that they have a gut feeling for what is going to happen.
Stay composed.
During a winning streak, many traders become too confident, believe that they suddenly can’t fail anymore and that they have a gut feeling for what is going to happen.
Stay composed.
9. Your greatest enemy as a trader
Most people think they’re playing against the market, but the market doesn’t care.
You’re playing against yourself.
Listen only to what the market is telling you now. Forget what you thought it was telling you five minutes ago.
Most people think they’re playing against the market, but the market doesn’t care.
You’re playing against yourself.
Listen only to what the market is telling you now. Forget what you thought it was telling you five minutes ago.
