1. Forget the news, remember the chart.
You're not smart enough to know how news will affect price. The chart already
knows the news is coming.
2. Buy the first pullback from a new high.
Sell the first pullback from a new low. There's always a
crowd that missed the first boat.
3. Buy at support, sell at resistance.
Everyone sees the same thing and they're all just waiting to jump in the
4. Short rallies not selloffs.
When markets drop, shorts finally turn a profit and get ready to cover.
5. Don't buy up into a major moving average
or sell down into one. See #3.
6. Don't chase momentum if you can't find
the exit. Assume the market will reverse the minute you
get in. If it's a long way to the door, you're in big trouble.
7. Exhaustion gaps get filled. Breakaway
and continuation gaps don't. The old traders' wisdom is
a lie. Trade in the direction of gap support whenever you can.
8. Trends test the point of last support/resistance.
Enter here even if it hurts.
9. Trade with the TICK not against it.
Don't be a hero. Go with the money flow.
10. If you have to look, it isn't there.
Forget your college degree and trust your instincts.
11. Sell the second high, buy the second
low. After sharp pullsbacks, the first test of any high
or low always runs into resistance. Look for the break on the third or
12. The trend is your friend in the last
hour. As volume cranks up at 3:00pm don't expect anyone
to change the channel.
13. Avoid the open. They
see YOU coming sucker
14. 1-2-3-Drop-Up. Look for
downtrends to reverse after a top, two lower highs and a double bottom.
15. Bulls live above the 200 day, bears
live below. Sellers eat up rallies below this key moving
average line and buyers to come to the rescue above it.
16. Price has memory. What
did price do the last time it hit a certain level? Chances are it will
do it again.
17. Big volume kills moves.
Climax blow-offs take both buyers and sellers out of the market and lead
to sideways action.
18. Trends never turn on a dime.
Reversals build slowly. The first sharp dip always finds buyers and the
first sharp rise always finds sellers.
19. Bottoms take longer to form than tops.
Greed acts more quickly than fear and causes stocks to drop from their
20. Beat the crowd in and out the door.
You have to take their money before they take yours, period.