Position Management, Market Psychology and Trading Rules  

Posted by Book Eater

Position management and Market Psychology

Reference: Citiseconline

1.) Quality is never an accident. It is always the result of high intention, genuine effort, intelligent action and skillful execution - Willa A. Foster
2.) Entering a trade is but half the work done in an investment scheme. Exiting a trade is the other crucial half, which in itself can call for loads of study and practice time.
3.) We are human.
4.) Systems are good as long as they are practiced and followed with diligence.
5.) The primary cause for major losses in trading is the overwhelming rush of human passions. These are expressed by greed, hope, fear and on occasion, desperation.
6.) Proper usage of position management will indeed come to save the day.
7.) Preventive maintenance is the key to one's success as it ensures one's ability to survive unforeseen or unlikely outcomes that would have otherwise been ruinous.
8.) Our objective therefore is two-fold. Raise the winnings ratio and Curb trade losses by introducing the 1:3 risk management system.
9.) Keep potential losses down to a controllable minimum.
10.) There is no point holding on anymore as the price has already proven your trade wrong, whether it is momentary or not, your read or timing was erroneous. You can always buy the stock back once the formations solidify.
11.) Break your risk management system and you are effectively leaving an open door for disaster.
12.) Success will come to those who can manage effective control of 2 capacities: financial ability and emotional steadiness.
13.) Distribute risk and condition heavier investments into more lucrative prospects.
14.) Comb a range between 3 to 5 stocks. Having all your capital into a single position can be just as devastating as it can be remunerating.
15.) Select the best possible performers.
16.) Even acrobats in high wire acts do their stunts with a safety net below them, for they know that it only takes one mistake...that mistake could cost them everything.
17.) Markets offer unlimited opportunities for self sabotage.
18.) A good trader watches his capital as carefully as a professional scuba diver watches his air supply. Cherish what you have. Focus on what you have. Don't focus on your losses.
19.) Move on proper motive. Move on proper time. Duck when the opponent is strong. Always have the upper hand. Hit then run. Never get yourself in a situation that you cannot control.
20.) The market will always be there, and it is you the trader, who is the variable who may or may not continue to exist as a player. There are a lot of vultures out there

Risk Control strategies and ideas:
1.) It may be a good idea to maintain a stop loss option that bleeds more than 2% to 3% of your entire capital.
2.) Only maximize your position if you are trading along with a trend. Let profits run in the direction of the market.
3.) Never bargain hunt into a downtrend or try catching a falling knife, do so only upon weakness within an uptrend.
4.) Never let a profitable trade run into a loss. Put a breakeven order on your trade.
5.) Correct mistakes immediately. Do not try to trade out of it.

6.) The gods cannot help those who do not seize opportunities. Always trail your stops along the trend move. Do not guess a corrective reactions power.
7.) It is better to get stopped out and reenter later than to risk too much on a single trade.
8.) Windfall profits should be taken advantage off. Take some profits into your position and trail a stop on any balance.
9.) Your only control over the markets, your best control over your profitability, lies in determining your risk, that is, how much you decide to lose when a trade turns against you.

- Nix

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