Skip to main content

James Cramer's Trading Commandments

Never Turn Trades into Investment

When the market move against you, cut loss. If you are hoping for the trade to turn good, you know you are done. What is the probability of a bad trade turn good? How long will you wait?

Your First Loss Is Your Best Loss

When you trade turn awry, cut loss fast. The subsequent loss is likely to be more severe. When a stock is down, its momentum tends to move it down further. The only hope you have is when there is a knee jerk reaction where the sell down comes with spike in volume. Chances are you will get quick reversal. Other than that, just cut off and move on.

It Is OK To Take Loss When You Already Have One

Losses, realized or unrealized, are actual losses. Unrealized losses if not taken, may lead to bigger losses. Don't let you capital sit there even if the capital is depleted. Move them to a better place.

Never Turn a Trade Gain Into Investment

Do not be too greedy. Know when to get out. Market can turn anytime. When it comes, it may be swift and steep and you may be caught off guard. Don't let it turn into losses.

Tips Are For Waiters (Waitresses)

Don't be fooled by hot tips. If you want tips, go and become a waiter or waitress.

You Don't Have a Profit Until You Sell (Close the Trade)

Paper gains can be wiped out when market swings. Don't let your profit sit there for too long. It may get bored and go away.

Control Losses: Winners Take Care of Themselves

It is more important to pay more attention to losing trade and limit the losses. You don't have to worry too much for the winners. Monitor losing trade so that you have good feel of when to cut loss.

Don't Fear Missing Anything

The opportunities will come again. Don't chase any stock. When you miss one on the price, you can be guaranteed that it will come back again some day at even lower price.

Don't Trade Headlines

News headlines are too brief and inaccurate. They just want to get it out quick. Take time to read into details and in between the lines. The stock will not fly away. You will not miss anything if you wait.

Don't Trade Flow

Don't buy just because someone is trying to sell you and you think it is convenient. Do research before you buy anything.


Labels:

Comments

Post a Comment

Popular posts from this blog

Spanish Debt Issues

There is a lot of talk about Spanish sovereign debts recently. I came across a research paper which I think is very useful for me and wish to share it here. This is taken from www.fundsupermart.com, an online fund broker where you can purchase funds form various fund managers. This portal provides some research and comparisons and it is essentially a self service portal. From the chart provided, we can see that there is a problem for Spain to service their debts for the next 4-5 years if the debts are not re-structured. With this kind of risk, no sane investors would want to risk their money to buy Spanish bonds. They can only turn to European central bank for bail out. The blue arrow is a fictitious line I draw assuming re-structuring is going to happen. Essentially, they have to move the payment of capitals into next 5-20 years to be affordable. In addition to that, they can't make additional loans. This is just taking a very simplistic view of the situation. To have that hap...
Post a Comment
Read more

How to do technical analysis for stocks?

I started investing in stock market about 20 years ago. Initially subscribing to IPOs. I had not have luck with IPOs. All of them ended with money losing deal, even though I held on to them for a few years. So, I concluded that the IPOs in Singapore market is over priced. Then I started to read analyst reports on stocks and invest in companies (typically blue chips). Not much profit but good dividends during the good years. Then, came the financial crises. I went on to buy blue chip companies during crises and I held them over the years and sold of a about 120% gain over 5 years on average. Due to some distraction, I stayed away from the market during this crisis and missed the opportunity to buy during the lows. Recently (few months ago), I had been doing some stock trading and currency trading using technical analysis method for more than a year. So far, I had tried many different technical analysis using different indicators (Moving averages, MACD, RMO, Fibonacci, Stochastics, RSI e...
Post a Comment
Read more

Trading systems

Here are some trading systems that can be used for trend following trading: ATR Channel Breakout : A volatility channel system that uses ATR as the volatility measure. Bollinger Breakout : A volatility channel system that uses the standard deviation as the volatility measure. Donchian Trend : A breakout system with a trend filter. Donchian Trend with Time Exit : A breakout system with a trend filter and a time-based exit. Dual Moving Average : A system that buys and sells when a faster moving average crosses over a slower moving average. Unlike the other systems, this system is always in the market, either long or short. Triple Moving Average : A system that buys and sells when a faster moving average crosses over a slower moving average but only in the direction of the major trend defined by a very slow-moving average.
Post a Comment
Read more