1. Making money is more important than being right.
2. Challenge your upside bias.
3. Never trade a tip.
4. Check your emotions at the door.
5. Change sides when the market tells you to.
6. Don’t fight the trend. Or the Dow.
7. Don’t chase prices. Let them come to you.
8. If you can’t explain the trade to your mother, you don’t understand the trade.
9. No one ever went broke by taking profits too soon.
10. Be patient with winning trades; impatient with losing ones.
11. The market is always right. When you start thinking the market is wrong, that means you are.
12. Sometimes, cash is the smartest position.
13. Pick expiration dates at least 5-6 weeks out.
14. Never hold more than 6 positions.
15. Deep In-the_money options only.
16. Watch your round-trips. No more than 2 in any given week.
17. Take money off the table in good times.
18. Being uncomfortable with trading is okay/normal.
19. Dump your traditional notions of “cheap” and “expensive.” A cheap stock is not a low-priced stock, a cheap stock is one with a low EPS multiple.
20. It doesn’t matter where a stock has been, only where it’s going.
21. Recognize that human psychology is what drives prices and the market. It isn’t always going to be logical, but it will always conform to an emotional paradigm.
22. Be able to “tell the story” of a stock’s price action.
23. There are no “good stocks” or “bad stocks.” There are only stock prices that are behaving within acceptable parameters. Or not.
24. Volume is king. Rising volume validates, dropping volume invalidates. Low volume periods such as after-hours will always show skewed data.
25. Never turn a trade into an investement, or an investment into a trade.
26. Bad news doesn’t get better with age.
“We are told that talent creates its own opportunities. But it sometimes seems that intense desire creates not only its own opportunities, but its own talents.” ~ Eric Hoffer