What I want to do is start a post of our individual rules and see how we compare.

1. Don't loose money
2. Don't forget rule number 1.
3. Remember the 2% rule.
4. Stay clear of stocks that trade >150,000 shares daily average (Rico Rule)

Modified by rico91stang at 11:19 AM 6/18/2008

Modified by rico91stang at 9:56 AM 6/19/2008

Quote, originally posted by NeverLift »

remember Fast and the Furious......remember when Vin Desiel lifted up the passenger seat of his FD and turn on those little Nos bottles. how many shots is one of those?

Rule #1 DON'T LOSE MONEY

Simple concept

Rule #2 DON'T FORGET RULE #1

Now we get to the nitty gritty. There is a reason Warren Buffet coined this term. It isn't EXACTLY what it says, and it's not exactly what he meant. You need to control your LOSSES. If you get into this game you will loose and loose QUITE often. In fact based on books and interviews I've read most of the top professionals are right (PROFIT) about 20-30% of their picks. The rest trade sideways or go against them. So if I were to tell you to you are only going to loose 7 times out of 10 how will you still stay in the game? Controlling how much you loose. Your profits will take care of themselves. You need to be more focused on your losses. A common theme on wall street is you need to be able to come back tomorrow. I remember John Najerian saying it in a book I read.

Quote, originally posted by NeverLift »

remember Fast and the Furious......remember when Vin Desiel lifted up the passenger seat of his FD and turn on those little Nos bottles. how many shots is one of those?

This is a common rule that many a professional abide by.

NEVER RISK MORE THAN 2% OF YOUR PORTFOLIO ON ONE TRADE. IF you have an account of $10,000. You must limit your loss to $200 for any trade. How risk averse you are will determine how to size your position (how many shares you will buy). Once you are down 2% of your portfolio in ANY stock, DUMP it.

Quote, originally posted by NeverLift »

remember Fast and the Furious......remember when Vin Desiel lifted up the passenger seat of his FD and turn on those little Nos bottles. how many shots is one of those?

This is one of my firm rules that I stand by. I have seen that others don't go by this rule so I'll call it a Rico rule. The reason I say you shouldn't trade a stock that trades on average 150,000 shares daily is because the price will fluctuate MADLY on you. Mutual funds can EASILY run up or run down stock that trade small volume. Remember they control the market.

They are also prone to gaps. Up which make you smile, and down which make you frown. A BIG reason not to trade these names is the gaps. If you are down and bad on a bad gap, and want to cut your loss, with soo few volume being traded, who is going to buy the stock?

Quote, originally posted by NeverLift »

remember Fast and the Furious......remember when Vin Desiel lifted up the passenger seat of his FD and turn on those little Nos bottles. how many shots is one of those?

1) Don't pick tops, bottoms
2) positioning is key, early entry can be devastating. Pick a price target and slowly build a position. Loading the boat at xx.xx is stupid.
3) VOLUME INDICATES EVERYTHING
3a) Ignoring 1, tops and bottoms are confirmed with big volume blowouts. At a bottom, massive short covering causes positive buying. Tops are indicated with sharp reversal patterns. For example, you may have a gap up, which signifies excessive buying. Excessive buying takes willing purchasing power off the market. Usually after these excessive buying situations, the next day will have similar volume but with down pressure. The gap will likely be filled, shorts will be winning, longs will be nervous and likely to sell as their stops getting pushed through. This is the end of the bull and beginning of a temporary downtrend.

I said hardest, because the entire market was bearish and so was the siltation. I was confident in my research, and ignored my emotions and stuck to my brain and kept clarity in the picture. Once you lose focus of your long-term goal, short term emotion always wins.

Build a strong "core" portfolio and fill in active pieces where need be. It is very difficult to build a well balanced portfolio that is 100% active. (Unless you have boatloads of time)

I prefer to play specific sectors, cap sizes, or styles over a 6month - 1yr time period. I generally avoid individual securities (though I have been known to purchase a few from time to time)

http://stockcharts.com/h-sc/ui...47479

Sometimes, but not always, high VIX can be the edge of the cliff . . .

disclosure: Still have the lehman 15s, we don't need no water let the motherfucker burn!

Quote, originally posted by NeverLift »

remember Fast and the Furious......remember when Vin Desiel lifted up the passenger seat of his FD and turn on those little Nos bottles. how many shots is one of those?

"Buy fear, sell greed."

For example, you can see SQM was overbought, even at $35 (left blue line). however, it continued its overbought pattern well to the $60 range(right blue line) where it broke down sharply. The arrows indicate a confirmation of trend line breaks, as long as the obvious change in the MACD. This is the end of a bullish pattern for SQM, you should be selling bounces in this stock, not buying dips

Where I have circled is where the magical green arrows would have shown up. At the third one youwould have gotten in the stock. I'd say if you followed the program exactly as it is taught, you would be right 80% of the time. You would just miss a lot of trades.

Quote, originally posted by NeverLift »

remember Fast and the Furious......remember when Vin Desiel lifted up the passenger seat of his FD and turn on those little Nos bottles. how many shots is one of those?

One of the rules I use when selling is : Use a Trailing Stop order.

This trade type is kinda complex, but if you can figure it out, buy in, and set a trailing stop, Stick to it, and let it ride, you don't have to worry so much about loosing your gains.

My second, and most often ignored rule is : Don't let emotion get in the way of hard data and statistics.

The worst trade I have ever made was out of fear. In my brain, I knew what I was doing was a bad idea. I did it anyway, despite all indicators telling me otherwise, and lost a lot of money because I didn't listen to the technical information and fundamentals. Mattgallis mentioned above that no security is immune to loses, and I agree 100%, but technical information and fundamentals should trump fear of loses. I am a strong believer in market efficiency.

I accelerate faster than gravity.

PGMFI.org wiki mirror

My EF Family

Oh and read some Buffet quotes, regardless if they have to do with money or not...most do.

Ive been reading Finanancial Times lateley too, it's probably the greatest paper ever.

Modified by Tadeh at 10:50 AM 7/11/2008

Missed some major moves these past 2 weeks.

SOLD MY TRIP HAULER ML55 AMG

SOLD MY HKS/VISHNU POWERED EVO VIII

SOLD MY GREDDY POWERED DB8 GSR-T

“Sadame wa oretachi ga tsukuru mono da”
We are the ones to choose our own destiny

Also, learn how a market functions. Not "what it's thinking".

Turbo D16z6 Del sol SI @ ~8.5psi D16z6
13.9@103 mph (uberdata EMS)

Quote, originally posted by Knightsport »

Don't know, he's always kind of an ass but that was out of left field. Oh well, -1% for unprovoked attack.

Quote, originally posted by V8MeatHead »

is that all you got