The 21 Things a Trader Must Know (and Do) Part 3

Focus: STRATEGIES

Jake Bernstein Image Jake Bernstein Publisher, The Jake Bernstein Online Weekly Capital Markets Report and Analysis

The things I consider most important for traders. While you may disagree with my points, know that they are based on near 50 years in the stock and futures markets, asserts Jake Bernstein in his weekly series.

Here are the top 21 a trader must know and do in order to achieve and maintain success. The first five have already been discussed in detail.

1. Don’t trade anything that scares you.

2. Know your competition.

3. Keep immaculate and complete records of every trade you make.

4. Consider the value of isolationism.

5. Understand sentiment and contrary opinion.

6. Trade entry should be mechanical exits on profitable trades should be flexible. This facilitates profit maximizing strategies.

7. Number six above necessitates trading multiple positions to which I mean more than 100 shares in more than one contract of futures or options.

8. Diversify: don’t overweight any one sector unless you methodology so dictates.

9. Never spread a position to avoid taking a loss.

10. Anticipate the news.

11. Use the news to your advantage by closing out some of your winning trades when prices spike in your favor based on the news.

12. Don’t be too quick to elaborate to your friends what exactly it is you do. They will suck you dry for free advice and they will never be happy with what you tell them.

13. The big money is made in the big move. Unless you trade large positions day trading probably won’t work for you.

14. Become well-versed in order types. Using the right order at the right time is critical.

15. Become an expert in what you do. Don’t try to do everything. You can’t do it all.

16. Be prepared for six consecutive losses. If you can’t handle that, then trading may not be for you.

17. Focus on the same markets and symbols consistently. Jumping around all over the place is not systematic. Unsystematic traders lose money.

18. Banish from your vocabulary subjective terms such as “looks like a buy signal.” What exactly does looks like mean?

19. If you’re a technical trader, then avoid thinking. It won’t help you. It will only hurt you.

20. Use a purely objective trading model such as the one I have developed which I call to set up, trigger, and follow through.

21. Find use market patterns because they are algorithmic and can be tested.

So, there you have it, the 21 things I consider most important for traders. While you may disagree with my points, know that they are based on near 50 years of work in the stock and futures markets.

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