After a 4 year hiatus following a failed attempt at trading (looking back on it now, I severely lacked discipline and commitment more than anything else) I have decided to give it another shot.
Read more about my first attempt and why I failed here:
after making the decision to return to trading I dusted off all the DVDs I was sent back in 2015 and starting them as soon as the year started. What seemed difficult and impossible at first quickly turned into habit and almost an addiction and I finished them all by February!
Next I read the Complete Pennystock Course Book and then went back and re-read all my notes and trading logs from 2015 and summarized the key takeaways here:
The purpose of this post is to publicly post all the rules I noted down while watching the DVDs that I was to be disciplined enough to follow in my second attempt at trading. Repetition is what has burned all these into my head and can't thank Tim enough for saying things like a broken record because that's what really engrains it into your head.
Here's what I plan to live by as I re-enter the world of trading this year. I really want to work on discipline first and foremost but I've also matured a lot and have much less urgency to be immediately successful and instead understand it's a marathon and not a sprint.
My goal is to take trading very seriously but only trade when my schedule allows part-time and only take the best plays. I would like to possibly trade full-time someday and leave the corporate world behind but I want to hone in my skills part-time first and make sure I'm disciplined enough to make it work. Excited to give this another go because trading is always something I've been interested in learning well before I found Tim so I really want to be successful this time!
Here are the rules I want to follow religiously this time around:
I am going to be a human robot
I am going to learn and perfect a single strategy but be ready to adapt to a new one at anytime
I am ALWAYS going to cut loses quickly
I will stick to my plan ALWAYS (or at least until I'm profitable and experienced)
I am in this to get good at it and become a profitable trader, not to ge rich but to become skilled first and foremost (monetary gain is a benefit of learning the trade)
i will not take any trades on impulse or where the risk/reward ration isn't at least 2:1
I will not overtrade or force trades, I will only trade when there are good opportunities (like a ninja, sniper, retired trader etc.)
I will not be influenced by chat rooms or noise, will only act when I know I'm right and 100% on my own will. Trading is waiting!
I will not predict but instead react based on odds/probability like a poker player
I will stay in tune with the market and always look at the bigger picture beyond a single stock and gather all info available before making a move
I will have 100% conviction and 0% confidence
I will not set ANY monetary goals
I will not be stubborn by falling in love with a getting attached to a trade, idea or a stock. I WILL adapt my strategy based on how the stock performs and exit or reverse if necessary
I will plot out every trade physically on a piece of paper until I have the discipline or skillset to do otherwise
I will create a plan for every trade: where I take profits/exit in order to remove all emotion for the transaction
If I am in doubt in a winning trade I will take 50% or 100% profit to ock in the win
For every idea I will ALWAYS consider the opposite and think other's entries and exit strategies compared to mine
again....I WILL NOT overtrade....only when good opportunities present themselves
again... I will be independent and think for myself when executing trades -> I will never ever try to make a quick buck off a trade alert or chatroom hype ever again
I will visualize the trade in my head ahead of time so it's rehearsed before I do it for real - Both the ideal good situation and worst-case bad one
I will NEVER use market orders and NEVER set stop-losses at round numbers
I will allow the stock to prove itself and buy higher or sell lower in order to improve my odds of the stock going the way I am predicting it will - otherwise I will just stay out!
I WILL NOT CHASE! I will observe trending stocks and create a plan to enter/exit
I will NOT worry about the stocks (ducks) I missed but instead focus on finding the next one and add it to my watchlist for the next day! (like playing duckhunt)
I will restart my trading journey by only buying breakouts and shorting breakdowns, allowing the stocks to prove themselves before entering
If a stock is falling off a cliff, I WILL NOT chase but instead wait for the bottom and buy the bounce or wait and short the lower high
I will consider the emotions of BOTH sides of a play...especially when I am in a trade so I know when to exit
I will make all decisions based on how stocks tend to magnet to half and whole numbers
I will NEVER STOP LEARNING!
I will ALWAYS be thinking "What's next?" for a stock? Green to red? Red to Green? Gap Up tomorrow? Gal down? Is it Friday? How will it close? What do price action / new mean for tomorrow? Will there be a morning panic? Late day fade? Where is the stock going???
I will hide my profit / loss column in order to NOT focus on $ but instead price action ONLY
I will only trade small positions to start... ONLY positions I am comfortable losing... good risk/reward ONLY
I will only think about the price action of the trade on the piece of paper in front of me.... NOT $$$ target personal goals!
I will NOT set profit goals
I WILL NEVER EVER EVER EVER believe in a company! I will be skeptical and trust NO ONE or any fundamentals. Despite positive or proven good fundamental news, I will ALWAYS do technical analysis and wait for price action, volume and know that fundamentals and technicals don't always match
I will always look at my most recent trade ( win or loss) as one trade of the many I am going to make. I will not let one trade make or break me but instead focus on the bigger picture and the greater journey ahead
I will treat each ticker as if the value I am spending is going towards a used car -> you don't just buy the first one you see.... you research then decide if it's worth your hard earned money
I accept the fact that I will ALWAYS leave money on the table, miss plays and take losses (by cutting losses quickly of course!) I will not try to hit the top or the bottom I WILL NOT HAVE FOMO...EVER!
I WILL treat pennystocking like a full time job where I am a professional and need to prove myself in a professional environment
Despite the last statement, I will not pressure myself to succeed or become a full time trader until I am successful at part time trading, then I will consider full-time trading If I think it's right for me...immediate goal is to make smart decisions and that includes not trading at all in order to not lose money if I don't see a good opportunity or have simply not been following the markets close enough to play! I will only play when I've done my homework and feel I am up to speed on the current state of the market and what is in play!!