1. Have a clearly defined trading plan and trade in accordance with it. Trade objectively, not subjectively.
2. Establish a maximum risk per trade and set clear profit-taking rules. Always follow these rules without exception.
3. Take profits regularly, the money isn’t truly yours until you do. Markets are intangible; use profits to acquire something tangible.
4. Trends are your friend—until they’re not. When a trend becomes uncertain, stop, pause, and adapt to new market conditions. Remember: being in cash is also a position.
5. If the market fails to make a higher high, it should make a lower low.
6. If the market fails to make a lower low, it should make a higher high.
7. Trends tend to stay intact longer than expected and often become stronger and more extreme toward the end of the move.
8. Trend theory suggests that up to 70% of a move can occur in the final 30% of the time—meaning individual stocks or markets can go parabolic.
9. Trends are much easier to identify than reversals. It is generally safer and more effective to trade in the direction of the prevailing trend.
10. Always consult multiple time frames to confirm confluence before entering a trade.
Written by Michael DiGioia, Director of Education
Mike is available for One-on-One Coaching. Learn More
