The Eleven Commandments of Trading

5 year chart of the S&P 500

The market is filled with stocks that rise in falling markets and fall in rising markets, that's why you must never be fully invested. Look at the chart above and remember that Indexes never come back up to form a "V" shape. We currently recommend an allocation of 50% Stocks (long and or short), 30% in the iShares Lehman "TIP", and 20% Cash. We wish our readers in all 58 countries (welcome Barbados and the Russian Federation) a happy and healthy weekend. Please come back Saturday night for the 'Psychology in the Upcoming Week's Data'. The Psychology of the Call team.

1. Never trade more than 10% of your total capital/account value in any one position.
2. Cash is King.
3. Cut losses to 15% maximum whenever possible. If your psyche is shaken, step away and don't trade for 1 week
4. Take and enjoy profits of 30% or more.
5. Never fall in love with a stock and never force trades or over trade; remember commandment #2.
6. Never accept excuses from management, period.
7. Use technical and fundamental data & psychology/sentiment from the conference call to select trades.
~8~ There are two sides to the market, long & short; take advantage of that leverage.
9. Understand the significance of the macro geo-political economic environment.
10. Unforeseen events/shocks will happen, inverting the market upside down (remember commandments #1 & #2)
11. All of the above are void without reading The Psychology of the Call.