15 Core Trading Principles
Stockscores Foundation for the week ending April 30, 2018
In this week's issue:
In This Week’s Issue:
- Stockscores Active Live April Performance
- Stockscores’ Market Minutes Video – What to Do When You Are Wrong
- Stockscores Trader Training – Core Trading Principles
- Stock Features of the Week – Do Nothing
Stockscores Active Live
April is done, here are the performance highlights from the live trade alerts identified using the Stockscores Worm day trading strategy during the Stockscores Active Live daily trading webinar (I will do a more in depth video review soon):
- Ideal day trade entry time for Buys continues to be 9:30 – 9:42 AM ET
- Total reward for risk from the Worm strategy long trades - +72.7
- Ideal day trade entry time for Shorts is 9:30 – 1:30 PM ET
- Total reward for risk from the Worm strategy short trades – +230.1
Active Live for May will run from Mon May 7 – Fri June 1 and is open for subscription to any Stockscores Active Trader member. For more information, CLICK HERE and watch the video overview.
Click here for information about the Stockscores Active Trader course.
Stockscores Market Minutes – What to Do When You Are Wrong
Being wrong is part of trading, but what you do when you are wrong can make a big difference between winning and losing in the market. That topic plus my market analysis and the trade of the week on FCAU. Click here to watch.
To get instant updates when I upload a new video, subscribe to the Stockscores YouTube Channel
Trader Training – Core Trading Principles
Here are 15 Core Trading Principles that every trader should understand and respect:
Follow the Action
Stocks that beat the market and provide the best profits trade with abnormal price and volume activity. Focus on these stocks.
Don’t Fight the Trend
More than ever, trading in the direction of the overall market trend will have a major effect on your performance. Short when the market is moving lower, buy when the market is moving up. Focus on the sectors of the market that are leading in either direction.
Be Patient with Winners
Avoid selling winners because it feels good to do so or because they have hit your price target. Never limit upside, just sell when the upward trend is broken.
Have No Patience with Losers
Being wrong is part of trading. What you do with your losers will determine your trading skill. For every trade that you take, know the price level where the market will prove you wrong and get out when it hits that price.
Do the Work
Trading is simple, but it is not easy. Take the time to learn and gather experience. Compile data to prove the worth of your trading strategies and never stop evolving your trading skills.
Don’t Fall in Love
The more you know about a company, the greater the risk that you will fall in love with it and ignore the negative signals that the market gives you. Treat every stock as a symbol that you are just as willing to sell as you are to buy. Keep your emotions out of it.
Respect Your Tolerance for Risk
We make emotional trading mistakes because we are afraid of losing money. If we take a risk level we are comfortable with, there is less chance we will get emotional.
Don’t Expect to Always be Right
You don’t make money in the market by being right, you succeed by making more when you are right than you lose when you are wrong. When the market tells you are wrong, believe it.
The Stock Market is Not Fair
Most investors are trading on information that is publicly available. Some investors are trading on better information that is not widely known. To be successful, you either have to have better information or follow those who do.
Don’t Aim for Perfection
All traders make mistakes, miss good opportunities and take questionable ones. Don’t get frustrated by the inevitable errors. Put your focus on being as good as you can be.
You Can Make More by Trading Less
Take the best trading opportunities, not the marginal ones. Bad traders act on their fear of missing out. Good traders sacrifice catching every winner in favor of maximizing their overall profitability. There is nothing wrong with doing nothing when conditions are not good for trading.
The Market Will Do Things That Don’t Make Sense
A market’s move is rarely explainable until after the move happens because the market trades on information that most traders don’t have. Don’t doubt the market’s movements, you probably don’t have all the facts.
Gamblers Lose
Good traders have a strategy that they have tested over a large sample of trades to understand the probability and profitability of success. Gamblers trade against the odds because they don’t know what they are.
Never Buy More of a Loser
If your analysis of a stock is correct, the trade will show a profit. If it is losing then you have only been proven wrong. Don’t make being wrong worse by adding to the position.
Add to Your Winners
When you are right, add to the position as long as you are not adding on more risk than you are comfortable with. The risk of your added positions should be mitigated by the profits from the earlier entries.
Back To Top
There is a lot of volatility in the market but very choppy, trendless price action. That is ok for day trading, but it is a difficult environment to trade longer term. After running all my Market Scans tonight, I think it is best to do nothing and be patient for good trades to come along.
