Comments On These Rules

[hagadol]

Found this interesting list posted by admin on Money Tec - Any comments on them ?

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 pool.

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 pullbacks, the first test of any high or low always runs into resistance. Look for the break on the third or fourth try.

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 own weight.

20. Beat the crowd in and out the door. You have to take their money before they take yours, period.

 

[TheBramble]

Well, they all look pretty sensible. Remembering them and acting upon them all might be more difficult.

Money tec is a website? Do you have the url?

 

[Skimbleshanks]

Those are Alan Farley's 20 top trading rules - as used on hardrightedge.com (if anyone wants to know more).

 

[bonsai]

typical commentator's motherhood stuff.

As Bramble says, difficult to trade because when you examine them in detail thay are all very ambiguous or useless.

Buy at support, sell at resistance.

Some levels are obvious but I bet you get caught out as often as not.

Bulls live above the 200 day, bears live below

Tell me where the 200 day was at the beginning of 2000 !



etc etc

 

[JonnyT]

I use 13) as my core trading strategy.

There are many ways to skin a cat.

JonnyT

 

[madasafish]

IMO most are ways to limit profits...

 

[darktone]

I assume that these rules are directed at stocks. Still...agree with above comments re profits etc..Worse still some seem to suggest you hold losers!

1) Watch for congestion/trends etc. News will often trigger the break from these areas. so no point in not being aware of 'news' and time it is released

2) id rather trade breaks

3) yes SR easy to spot in E$

4) err..no no and no

5) I dont do mas

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." does that mean keep the loser if its running against you cos you will be probably time it wrong for exit but if it keeps going your in trouble!! LMAO

7) i dont trade gaps.

8) well depends on weather or not its a major level9Ie a daily level), perhaps, but not if it travelling at a million miles an hour.

9) lol . in slight conflict with rule 4 wouldn't u say.

10) well,, yes

The rest is dross to be honest

If you want my opinion on these rules in general then its a thumbs down from me, agree with bonsai that its vendors rubbish in the main

 

[oatman]

I suspect (6) means don't get carried away chasing a move to get in. You must always know your "out" before you enter.
These rules generally apply to all markets, not just stocks.
It's mostly a basic summary of the herd mentality.

 

[lita]

I'm afraid Mr. Alan Farley lives in the same camp as Stanley Unwin. Anybody tried to read Master Swing Trader from cover to cover?

 

[Skimbleshanks]

Ahhh ... there's a trick to reading the book - as told to me by Mr Farley himself. Start at chapter 5, and then when you've finished, go back and read chapters 1-4 as they will then make much more sense.

 

[SvenFoster]

Having read "Master Swing Trader" from cover to cover I can understand why people may struggle to get a grip on some of Mr Farleys points (I know I did)

If you read it enough times you start to see where he is coming from. He advocates "swing trading" is the sense of capturing short term movements however he doesn't prefer any particular timeframe. In fact he uses 3 timeframes when determining entries and exits and definitely advocates strict money management

At no point did I ever read "let your losses run, cut your profits". If anything using "multitimeframe analysis" allows you to manage your losses very effectively IMHO.

His book focuses on crowd psychology, exit, entry and trade management and has many pearls which will no doubt be taken out of context and placed as snippets on sites around the web.

I agree its a bit "sound bite"-ish and I do think he maybe rushed the book a bit but he's got to put at least one
20 tips to make you rich section in his book

Looking at the "tips" mentioned I can see the context they were intended for but can also understand without that context they are just more bullet points that will be replicated from puter to puter across the universe.

I prefer his other "tips"
If 90% of traders loose money the crowd is always wrong.
Enter before,after or contrary to the crowd.
Only enter with the crowd if the "greater fool" exists
Enter in mild times, exit in wild times.


This book helped me and improved my trading including the tips but I'm still on a quest and suggest you take from it what you can and move on.

-Sven

 

[BBB]

For what it's worth:

5/ Dont use MA's full stop (for trading signals) use them for descriptive purposes only. Even a 3 day MA gives its signal 3 days too late.

7/ Fading gaps, especially in sideways markets is a low risk strategy.

8/ Is this guy on drugs? Never enter a trade if it hurts or you aren't confident. Scared money is lost money.

11/ Now I'm lost! I make a heap of money doing the opposite of this!

13/ Depends what time frame your trading.

16/ This is a good rule.

17/ ditto.

19/ eh? Has this bloke ever looked at a chart? Bottoms are ALWAYS shorter in duration than tops due to emotions. People see low prices as value so buy (rightly or wrongly). People see high prices and assume they will carry on buying - even in sideways markets. Most participants tend to be longs anyway - i.e. the public. The only exception to this would be long basing patterns, but these tend to be based due to the fundamentals, not technical reasons.

Pretty typical stuff really though. All the rules are on trade entry. Not a single sentence/rule ON HOW TO MAKE MONEY TRADING! Nothing on trade management, or money management which are the two most important parts of the equation.

Jesus on a Buddah! a four year old can enter the market, but only a trader can exit consistently with $$$$$$$.

 

[TheBramble]

Ahhh ... there's a trick to reading the book - as told to me by Mr Farley himself. Start at chapter 5, and then when you've finished, go back and read chapters 1-4 as they will then make much more sense.

I wonder why he didn't write it that way in the first place?

 

[BBB]

lol. Because he's an author, not a trader. If they made things that simple Tony, they wouldn't be able to justify their existence

 

[JonnyT]

I like the comment about Climax and Blow Off.

My favourite pastime during the Lunch Time lul.

JonnyT