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Introduction
The below rules were originally published in the October 1989 issue of Futures as part of a profile on well-known market guru
Dennis Gartman. They are included here in support of the regular "30 Years of Futures" installment in the print issue, which
celebrates more than three decades of serving futures traders.
The below rules were originally published in the October 1989 issue of Futures as part of a profile on well-known market guru
Dennis Gartman. They are included here in support of the regular "30 Years of Futures" installment in the print issue, which
celebrates more than three decades of serving futures traders.
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| Daytrader-Generation “No Gambling but True Working Tools to Achieve Profit” "Day-Trading, Business of the Future !" |
| IMPORTANT RULES, NEVER EVER TO FORGET ! |
Rule 1
The first and most important rule is this : In a bull market, you
can only be long, bull spread or out. Conversely, in a bear market,
you can only be short, bear spread or out.
Rule 2
Buy that which is showing the most strength; sell that which is
already showing weakness. The rule of survival is not to "buy low"
sell high" but to "buy high and sell higher." Use this rule
especially when spreading currencies.
Rule 3
Do not enter a trade until it has been thought out, including
contingency plans and where to add to the trade.
Rule 4
Add to trades on minor corrections to support or resistance levels
against the major trend. Use the 33% or 50% correction level of
the previous movement as a first point at which to add.
Rule 5
Be patient ! If a trade is missed, wait until a correction occurs
before putting on the trade. So if you MISSED an ENTRY ...
NEVER EVER CHASE it !!
Rule 6
Be patient ! Once a trade is put on, allow it time to develop and
give it time to create the profits expected.
Rule 7
Be patient ! The old adage that "you never go broke taking a
profit" is the most worthless piece of advice ever given. Taking
small profits is the surest way to ultimate loss. The real money in
speculation is made from the one, two or three large trades that
develop each year. It takes time for these to develop.
Learn to "TAKE YOUR PROFITS" ...
DO NOT GIVE THEM BACK! EVER!
Rule 8
Be impatient ! As always, small losses and quick losses are the
best losses. Too much time and mental capital is used up when
sitting with a losing trade.
Rule 9
Never ever under any condition add to a losing trade. Never ever
"average" into a position. If buying, each new buy prices must be
higher than the previous buy price; vice versa for selling.
Rule 10
Do more of that which is working ; do less of that which isn't.
Don't merely "let your profits run." Each day, look at the various
positions you are holding and try to add to the trade that has the
most profit while subtracting from that trade that is either
unprofitable or is showing the smallest profit.
Rule 11
Don't trade until the technicals and fundamentals agree.
The first and most important rule is this : In a bull market, you
can only be long, bull spread or out. Conversely, in a bear market,
you can only be short, bear spread or out.
Rule 2
Buy that which is showing the most strength; sell that which is
already showing weakness. The rule of survival is not to "buy low"
sell high" but to "buy high and sell higher." Use this rule
especially when spreading currencies.
Rule 3
Do not enter a trade until it has been thought out, including
contingency plans and where to add to the trade.
Rule 4
Add to trades on minor corrections to support or resistance levels
against the major trend. Use the 33% or 50% correction level of
the previous movement as a first point at which to add.
Rule 5
Be patient ! If a trade is missed, wait until a correction occurs
before putting on the trade. So if you MISSED an ENTRY ...
NEVER EVER CHASE it !!
Rule 6
Be patient ! Once a trade is put on, allow it time to develop and
give it time to create the profits expected.
Rule 7
Be patient ! The old adage that "you never go broke taking a
profit" is the most worthless piece of advice ever given. Taking
small profits is the surest way to ultimate loss. The real money in
speculation is made from the one, two or three large trades that
develop each year. It takes time for these to develop.
Learn to "TAKE YOUR PROFITS" ...
DO NOT GIVE THEM BACK! EVER!
Rule 8
Be impatient ! As always, small losses and quick losses are the
best losses. Too much time and mental capital is used up when
sitting with a losing trade.
Rule 9
Never ever under any condition add to a losing trade. Never ever
"average" into a position. If buying, each new buy prices must be
higher than the previous buy price; vice versa for selling.
Rule 10
Do more of that which is working ; do less of that which isn't.
Don't merely "let your profits run." Each day, look at the various
positions you are holding and try to add to the trade that has the
most profit while subtracting from that trade that is either
unprofitable or is showing the smallest profit.
Rule 11
Don't trade until the technicals and fundamentals agree.
| Source : "Futures" from Dennis Gartman |
Rule 12
When you experience sharp breaks in equity, take time off. Close all
trades and refrain from trading for several days.
Rule 13
When trading well, trade somewhat larger. You must make your proverbial
"hay" when the sun does indeed shine.
Rule 14
When adding to a trade, add only a fourth to a half as much as currently
held. That moves the average price of your holdings less than half of the
distance moved, thus allowing you to sit through 50% corrections without
touching your average price.
Rule 15
Think like a guerrilla warrior and fight on the side of the market that is
winning. If no side is winning, you don't need to fight.
Rule 16
The "Emotional YOU" is going to be your worst enemy !
Rule 17
Always be ready for the possible SHORT SQUEEZE !
Rule 18
NEVER EVER try to predict the opening price of the next day !
Rule 19
Never ever forget your " EMERGENCY PARACHUTE EXIT" rule !
Rule 20
The "Day Trading" Golden Rule : ALWAYS CLOSE ALL YOUR POSITIONS
BEFORE THE MARKET CLOSE !
Rule 21
ALWAYS ALWAYS ALWAYS put your stops in BEFORE you take a
position !
Rule 22
Markets can remain illogical far longer than you or I can remain solvent.
The University of Chicago "boys" have argued for decades that the
markets are rational, but we in the markets every day know otherwise.
We must learn to accept irrationality, deal with it, and move on.
Rule 23
Trading runs in cycles ; some are good, some are bad, and there is
nothing we can do about that other than accept it and act accordingly.
Rule 24
To trade successfully, think like a fundamentalist; trade like a technician.
Rule 25
In trading, an understanding of mass psychology is often more important
than an understanding of economics.
When you experience sharp breaks in equity, take time off. Close all
trades and refrain from trading for several days.
Rule 13
When trading well, trade somewhat larger. You must make your proverbial
"hay" when the sun does indeed shine.
Rule 14
When adding to a trade, add only a fourth to a half as much as currently
held. That moves the average price of your holdings less than half of the
distance moved, thus allowing you to sit through 50% corrections without
touching your average price.
Rule 15
Think like a guerrilla warrior and fight on the side of the market that is
winning. If no side is winning, you don't need to fight.
Rule 16
The "Emotional YOU" is going to be your worst enemy !
Rule 17
Always be ready for the possible SHORT SQUEEZE !
Rule 18
NEVER EVER try to predict the opening price of the next day !
Rule 19
Never ever forget your " EMERGENCY PARACHUTE EXIT" rule !
Rule 20
The "Day Trading" Golden Rule : ALWAYS CLOSE ALL YOUR POSITIONS
BEFORE THE MARKET CLOSE !
Rule 21
ALWAYS ALWAYS ALWAYS put your stops in BEFORE you take a
position !
Rule 22
Markets can remain illogical far longer than you or I can remain solvent.
The University of Chicago "boys" have argued for decades that the
markets are rational, but we in the markets every day know otherwise.
We must learn to accept irrationality, deal with it, and move on.
Rule 23
Trading runs in cycles ; some are good, some are bad, and there is
nothing we can do about that other than accept it and act accordingly.
Rule 24
To trade successfully, think like a fundamentalist; trade like a technician.
Rule 25
In trading, an understanding of mass psychology is often more important
than an understanding of economics.
Trader : Herman Bogaerts -- Tradersname : Freedom
E-Mail : Herman.Bogaerts@Wanadoo.fr -- Herman_Bogaerts@Yahoo.com
E-Mail : Herman.Bogaerts@Wanadoo.fr -- Herman_Bogaerts@Yahoo.com
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