My 10 Top Trading Commandments

by: Jordan Kahn

In lieu of posting my New Year's resolutions, I thought I would revisit my Top 10 Trading Commandments. I like reading this list every so often, because it is when we lose focus of these principles that we make mistakes, costly mistakes.

Here they are:

  • Discipline trumps conviction. Don't let your bad trades turn into investments.

  • Perception is reality in the market. Adapt your style to the market, and learn to accept the market as it is, not how you wish it was.

  • Play great defense, not great offense. Opportunities are made up easier than losses.

  • Don’t confine your thinking in terms of boundaries. Expect the extreme, and don’t miss major profit opportunities.

  • Know your companies. Hold your stock as long as it is performing properly, cut your losses fast, and don’t "hope" for a rebound.

  • Risk control is important. Always quantify your risk going into a trade.

  • Be diligent and thorough in your research. Do your homework, recap each day, and learn from your mistakes.

  • Don’t get caught in a situation in which you could lose a great deal of money for reasons you don’t understand.

  • Respect the price action, but never defer to it. When unsure, trade "in between."

  • Emotion is the enemy when trading. Be greedy when others are fearful, and fearful when others are greedy.