7 Trading Rules... Trading Guide from Delta Index
1 – Don’t look for tips • Don’t ask for tips; don’t act on them. ‘But my friend works in finance and he said he has a sure thing…’ ‘My Friend is making a fortune buying gold’ • BUYING is not even half of the equation. When do you sell? Where do you place your stop? How much should you risk? If the tipster hasn’t told you, he’s told you nothing.
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Issued: September 2010
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2 – Avoid picking tops and bottoms • Picking tops and bottoms in strongly trending markets is as risky as it gets. • The good news is you can still make money by taking a proportion of the move with a coherent trend following strategy.
Delta Index is regulated by the Irish Financial Regulator. In the UK, the FSA has a supervisory role in respect of Delta Index UK’s conduct of business.
Issued: September 2010
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3 – Plan your exits • Planning an exit strategy is arguably more important than planning your entry. Between your entry and your exit you need to ‘manage the trade’. • Do you take profits at a given stage? Or are you going to add to your position if it moves in your favor ? This might seem like hard work. It’s not really, and will become second nature to you. By developing a coherent plan and executing it, you’ll take the stress and the guesswork out of trading.
Delta Index is regulated by the Irish Financial Regulator. In the UK, the FSA has a supervisory role in respect of Delta Index UK’s conduct of business.
Issued: September 2010
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4 – Take Control • You will be 'wrong‘. But this is OK A trait of a good trader, is the ability to take some small losses, but let winners run. Questions to ask yourself Do you •
Not put in stops? - You don’t want to be proven wrong
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Not get out when you can? - As above
•
Add to a losing trade? - As above, only more so
•
Take profits early? - You want affirmation you did the right thing
•
Miss opportunities because you could not pull the trigger? -You’re haunted by past mistakes
A good trader has emotional control and discipline Delta Index is regulated by the Irish Financial Regulator. In the UK, the FSA has a supervisory role in respect of Delta Index UK’s conduct of business.
Issued: September 2010
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5 – Don’t think of the money
• Money makes people do funny things. Good traders don’t enter a position to make X euro; they enter because the trade makes sense. • Concentrate on executing your trading plan well, and the money will follow
Delta Index is regulated by the Irish Financial Regulator. In the UK, the FSA has a supervisory role in respect of Delta Index UK’s conduct of business.
Issued: September 2010
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6 – Don’t chase the runaway train •
You see a stock that has exploded higher. You’re tempted to get in…but you don’t. Wait for the pullback. The price keeps rising… and rising…and rising. If you’d bought, you’d have made a fortune. You fool! You fool! But it’s not too late. Look at that momentum! You’ll get in and offload it for a quick profit. You buy only to see the stock turn against you, leaving you with a choice: do you offload for a quick loss or hold on and hope?
• The above happens all the time. If you’re late to the party, go home. • Yes, there will be occasions when you’ve missed an opportunity. Accept this, don’t beat yourself up and move on to the next opportunity - there will be many more.
Delta Index is regulated by the Irish Financial Regulator. In the UK, the FSA has a supervisory role in respect of Delta Index UK’s conduct of business.
Issued: September 2010
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7- Don’t Average down
• Averaging down refers to the practice where, faced with a plummeting share price, the trader buys additional stock, thereby lowering the average price paid per share. • It's a sin that traders may get away with on occasions, but it's an awful habit to get into and, like most awful habits, it will eventually get you into trouble.
Delta Index is regulated by the Irish Financial Regulator. In the UK, the FSA has a supervisory role in respect of Delta Index UK’s conduct of business.
Issued: September 2010
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Delta Index
7 Deadly Trading Sins... This guide was prepared and is distributed by Delta Index for information purposes only. This guide does not constitute an offer, advice or a recommendation to enter into any transaction or solicitation for the purchase or sale of any financial instrument. Risk Warning: Financial Spread Betting and Contracts for Difference are leveraged investment products which may not be suitable for everyone. These products carry increased levels of risk which may result in losses that exceed your initial deposit. Please ensure that you fully understand the risks involved before using these products.
Delta Index is regulated by the Irish Financial Regulator. In the UK, the FSA has a supervisory role in respect of Delta Index UK’s conduct of business.
Issued: September 2010
View our Terms & Conditions http://www.deltaindex.com/terms/
Delta Index – Sep 2010