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Taking Stock Of Cramer
Most Common Mistakes
Break out Trading
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Surviving Bear Markets
The Big W
20 golden rules
20 rules trade execution
20 rules stop losing money
Cutting Loses
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Greed and Fear
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Jim Cramer's Real Money: Sane Investing in an Insane World
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20 Rules
For Effective Trade Execution
| Execution can be the weakest link in an otherwise
great market strategy. After all, it's a lot easier to
find good stocks than to trade them for a profit. So how
do we enter the market at just the right time and
capture the big moves we see on our charts?
Here are 20 rules for effective trade execution. Try
these out the next time you're getting ready to pull the
trigger. |
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| 1. Seek favorable conditions for trade entry, or stay
out of the market until they appear. Bad execution ruins
a perfect setup.
2. Watch the tape before you trade. Look for evidence to
confirm your opinion. Time, crowd and trend must support
the reversal, breakout or fade you're expecting to
happen.
3. Choose to execute or to stand aside. Staying out of
the market is an aggressive way to trade. All
opportunities carry risk, and even perfect setups lead
to very bad positions. |
4. Filter the trade through your personal plan. Ditch it
if it doesn't meet your risk tolerance.
5. Stay on the sidelines and wait for the opportunity to
develop. There's a perfect moment you're trying to
trade. |
6. Decide how long you want to be in the market before
you execute. Don't daytrade an investment or invest in a
swing trade.
7. Take positions with the market flow, not against it.
It's more fun to surf the waves than to get eaten by the
sharks.
8. Avoid the open. They see you coming, sucker.
9. Stand apart from the crowd. Its emotions often signal
opportunity in the opposite direction. Profit rarely
follows the herd.
10. Maintain an open mind and let the market show its
hand before you trade it.
11. Keep your hands off the keyboard until you're ready
to act. Don't trust your fingers until they move faster
than your brain, but still hit the right notes.
12. Stand aside when confusion reigns and the crowd
lacks direction.
13. Take overnight positions before trading the intraday
markets. Longer holding periods reduce the risk of a bad
execution.
14. Lower your position size until you show a track
record. Work methodically through each analysis, and
never be in a hurry.
15. Trade a swing strategy in range-bound markets and a
momentum strategy in trending markets.
16. An excellent entry on a mediocre position makes more
money than a bad entry on a good position.
17. Step in front of the crowd on pullbacks and stand
behind them on breakouts. Be ready to move against them
when conditions favor a reversal.
18. Find the breaking point where the crowd will lose
control, give up or show exuberance. Then execute the
trade just before they do.
19. Use market orders to get in fast when you can watch
the market. Place limit orders when you have a life
outside of the markets.
20. Focus on execution, not technology. Fast terminals
make a good trader better, but they won't help a loser.
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