Timeless Rules for Profitable Low Risk Trading  

Timeless Rules for Profitable Low Risk Trading
(Summarized Version)
1.) Gerald M. Loeb “ The Skittish Trader”

• Take things more slowly and start gradually.
• Assess your strengths and weaknesses. Requires knowing yourself and your limitations
• There is no sure investment.
• Application and diligence are the keys to success
• Speculating is taking a calculated risk based on an intelligent estimate of future possibilities.
• Hard work is required to succeed in trading.
• Luck played no part in the success or failure of a trader. Rather, it is knowledge and a premium ability that lead to success.
• Best traders are usually psychologists. Worst traders are accountants.
• You must trade with the actions of the market, not with how you think the market should trade.
• Trading decisions should be based on opportunities, not on hopes and dreams.
• Rely on solid trading rules instead of emotions.
• It doesn’t matter what you think because the market will come to its own conclusions whether stocks were overvalued or undervalued.
• Great successes could lead to overconfidence, which would end up doing considerable damage if not contained.
• Manage confidence levels to avoid getting out of control.
• Overtrading and trading against the market is a losing strategy.
• Big money is made in the leaders
• The very best speculators want to make a killing in the stock market.
• Set goals at the highest levels.
• Speculation is for large gains, not for income returns, but you need to measure and reduce the risk as low as possible.
• Review losing trades to keep oneself learning and avoid making the same mistakes in the future.
• Success in trading is measured in 3 dimensions:
o Risk
o Reward
o Consistency
• Early movers will normally make new highs before averages do and end up being the real leaders, providing the best price increases.
• Worry when all stock prices are very high, when most investors are overly optimistic and when everything in the market seems perfect.
• Stocks that make new highs and quiet stocks that start to creep up in price and develop positive signs on higher volume are the best candidates for further study.
• The ability to cut losses short and move on if the stock moves against you is the surest insurance policy to protect against large losses.
• The trend of the market is so important, it also determines how certain trading rules are implemented and acted upon.
• It is expectation, not the news, that moves markets.
• The most expensive is actually the cheapest.
• Sell your worst shares first and keep your best performers in your portfolio.
• You need to sell before it’s obvious to everyone else.
• It is better to let the action of the market determine if the stock is too high priced rather than your own personal opinion

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