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.
Over my 23-year Wall Street career, whenever I strayed from my discipline and started reaching, chasing or otherwise pressing, it came back to haunt me.
Slow and steady isn't sexy but it wins the race for a reason; when it comes to the financial markets, performance is a marathon, not a sprint.
As you stretch your legs and lace your sneakers, I’ll share the guidelines that have improved my performance, in no particular order.
(And for more of such advice on trading, investing or managing your money, check out our new MV Education Center.)
The 20 Rules of Engagement
1. Have a game plan before stepping on the field.
Map the particulars of your strategy -- including the price parameters of your purchase and risk definition of your exit -- before you enter the market. Once you’ve assumed risk, focus on your trade; if you’re not, you’re at a competitive disadvantage.
2. Manage risk rather than chase reward.
If you understand what your downside is before entering a trade, you’re less likely to overthink your position or panic out of the trade. Once that is quantified, the upside will materialize and you can adapt your reward parameters, if necessary.
For more pro trading and investing tips, check out Minyanville's new MV Education Center.
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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