31 Rules Successful Traders and Investors Live By

David Frost // Blog


November 24  

Nothing new or different ever happens in the world of investing and trading

The names change, the people change and the news headlines change.  People's reactions to fear and greed are always the same.

Traders who make the most money long term make the least amount of trades

Over trading is one of the greatest temptations a person must overcome.  The trading and investment business is one that often requires failure to succeed.  The traders with the most patience stalk their pray and pounce when the time is right.

Time is more important than price

Many traders argue this point.  There's nothing to debate, everything can be seen crystal clear on the charts, traders just have to view it correctly.  Once they do, the discussion comes to an end. 

You're opinion does't matter, only the what the charts say  

If you're not sure or can't confirm a pattern, do nothing.

Markets are never wrong – people and their opinions often are

6. The real money made in speculating has been in commitments showing in profit right from the start.

7. Enter a trade only when you know where you would be wrong if the reason for the trade ceases to exists. Always identify an exit point prior to entering a trade.

8. As long as a stock is acting right, and the market is right, do not be in a hurry to take profits.

9. The human side of every person is the greatest enemy of the average investor or speculator.

10. If you must lose, lose small and fast.

11. Never chase a trade.

12. Wishful thinking must be banished.

13. The leaders of today may not be the leaders of two years from now.

14. Markets like to come back and test previous breakout and breakdown areas.

15. One should never permit speculative trades to turn into investments.

16. It is much easier to watch a few stocks than many.

17. The money lost by speculation alone is small compared to the gigantic sums lost by so-called investors who have let their investments ride up and then ride them all the back down again.

18. Few people ever make money on tips. Beware of inside information. If there was easy money lying around, no one would be forcing it into your pocket.

19. Never buy a stock just because it has had a big decline from its previous high.

20. Never sell a stock just because it seems high-priced.

21. Daily closing prices are important.

22. Do not invent trades.

23. Do not let emotion keep you in a trade if the reason for the trade no longer exists.

24. Do not be afraid to cut and run.

25. It is not good to be too curious about all the reasons behind price movements. Just accept it and take advantage of it.

26. The trend is your friend… to the very end.

27. Big movements take time to develop. Be patient.

28. There is always another trade around the corner. The next trade has no idea of what happened with your last trade. Do not let old trades affect your outlook on future trades.

29. Prices move along the path of least resistance.

30. Do not become completely bearish or bullish on the whole market because one stock in some particular group has plainly reversed its course from the general trend.

31. Sometimes, the best trade is no trade. 

About the Author

Trading and investing in markets is second nature to some, but a mystery to others. The goal is to provide a forum where everyday people aspiring to be part time or full time traders will learn how view markets differently and profit beyond their wildest dreams.

David Frost