Saturday, April 12, 2008

The Eleven Commandments of Trading

We want all of our trusted supporters to enjoy the weekend, beginning with our April 1st commentary, posted just 11 days ago when the market was up 400 points. We purposefully used this image of the coronation of a "Bull" as a slightly satirical commentary.

“So should you be jumping in head first with a ‘Buy, Buy, Buy’ mentality? Well, no; the wounds are too fresh to be jumping in just yet. But bear in mind that there are a few stocks that still maintain a sold position above their 200dma and we would consider trading them now. Perhaps Intuitive Surgical (ISRG) is a stock to consider?

“All in all, we suspect it would be wise to fade/ignore the well "dressed" bulls today and remember that it’s still very early in the formation of a market bottom. You can always buy a multitude of "theme stocks" if we have in fact touched bottom. But you can a short a multitude of "false" stocks if the fledgling trend begins to lose volume and break (there are always two sides to the market, as we state in Commandment #8 in the left margin).

We usually look back at Index bottoms and recall how "boring" the sentiment became before a new bullish trend set in, we assume boring is not being tossed around Institutional trading desks today.

------- These insights were very forward-looking, and we take pride in our analyses. We wish every one of you in over 60 countries a peaceful and comfortable weekend and please do come back tonight for the "The Psychology of the Upcoming Week's Data."

The Psychology of the Call team.

We offer you the 11 Commandments again

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.

1 comment:

Anonymous said...

Garmin wasn't a 30% profit?