1. Forget the news, remember
the chart. You're not smart enough to know
how news will affect price. The chart already knows the news
is coming.
2. Buy the first pullback
from a new high. Sell the first pullback from a new low.
There's always a crowd that missed the first boat.
3. Buy at support, sell at
resistance. Everyone sees the same thing and
they're all just waiting to jump in the pool.
4. Short rallies not
selloffs. When markets drop, shorts finally
turn a profit and get ready to cover.
5. Don't buy up into a major
moving average or sell down into one. See #3.
6. Don't chase momentum if
you can't find the exit. Assume the market
will reverse the minute you get in. If it's a long way to
the door, you're in big trouble.
7. Exhaustion gaps get
filled. Breakaway and continuation gaps don't.
The old traders' wisdom is a lie. Trade in the direction of
gap support whenever you can.
8. Trends test the point of
last support/resistance. Enter here even if
it hurts.
9. Trade with the TICK not
against it. Don't be a hero. Go with the
money flow.
10. If you have to look, it
isn't there. Forget your college degree and
trust your instincts.
11. Sell the second high, buy
the second low. After sharp pullsbacks, the
first test of any high or low always runs into resistance.
Look for the break on the third or fourth try.
12. The trend is your friend
in the last hour. As volume cranks up at
3:00pm don't expect anyone to change the channel.
13. Avoid the open.
They see YOU coming sucker
14. 1-2-3-Drop-Up.
Look for downtrends to reverse after a top, two lower highs
and a double bottom.
15. Bulls live above the 200
day, bears live below. Sellers eat up rallies
below this key moving average line and buyers to come to the
rescue above it.
16. Price has memory.
What did price do the last time it hit a certain level?
Chances are it will do it again.
17. Big volume kills moves.
Climax blow-offs take both buyers and sellers out of the
market and lead to sideways action.
18. Trends never turn on a
dime. Reversals build slowly. The first sharp
dip always finds buyers and the first sharp rise always
finds sellers.
19. Bottoms take longer to
form than tops. Greed acts more quickly than
fear and causes stocks to drop from their own weight.
20. Beat the crowd in and out
the door. You have to take their money before
they take yours, period.
