Stock Market Trading: The 20 Rules of Engagement
"Good traders know how to make money; great traders know how to take a loss," and 19 other truisms to trade by.
13. When unsure, trade "in-between."
Not all trades are created equal, and your risk profile should be an extension of your confidence. If your relative conviction is muted -- or when trading during a period of heightened volatility -- the size of your position should decrease in kind.
14. The reaction to news is more important than the news itself.
Most traders prefer to trade into a catalyst, but the reaction to the catalyst often provides valuable clues about the strength of the underlying stock or environment. While the old adage is to “buy the rumor, sell the news,” opportunities emerge once the dust settles and the fast money trades out.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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