trading mistakes, page-15

TWENTY-FOUR NEVER-FAILING RULES By W D GANN

1. Amount of capital to use: Divide your capital into 10 equal parts and never risk more than one-tenth of your capital in any one trade.
2. Use stop loss orders. Always protect a trade when you make it with a stop loss order 3 to 5 points away.
3. Never overtrade. This would be violating your capital rule.
4. Never let a profit run into a loss. After you have made a profit or 3 points or more, raise your stop loss order so that you will have no loss of capital.
5. Do not buck the trend. Never buy or sell if you are not sure of the trend according to your charts.
6. When in doubt, get out, and dont get in when in doubt.
7. Trade only in active stocks. Keep out of slow, dead ones.
8. Equal distribution of risk. Trade in 4 or 5 stocks, if possible. Avoid tying up all your capital in any one stock.
9. Never limit your orders or fix a buying or selling price. Trade at the market.
10. Dont close your trades without good reason. Follow up with a stop loss order to protect your profits.
11. Accumulate a surplus. After your have made a series of successful trades, put some money into surplus account to be used only in emergency or times of panic.
12. Never buy just to get a dividend.
13. Never average a loss. This is one of the worst decisions a trader can make.
14. Never get out of the market just because you have lost patience or get into the market just because you are anxious from waiting.
15. Avoid taking small profits and big losses.
16. Never cancel a stop loss order after you have placed it at the time you make a trade.
17. Avoid getting in and out of the market too often.
18. Be just as willing to sell short as you are to buy. Let your object be to keep with the trend and make money.
19. Never buy just because the price of a stock is low or sell short just because the price is high.
20. Be careful about pyramiding at the wrong time. Wait until the stock is very active and has crossed resistance levels before buying more.
21. Select the stocks with small volume of shares outstanding to pyramid on the buying side and the ones with the largest volume of stock outstanding to sell short.
22. Never hedge. If you are long one stock and it starts to go down, do not sell another stock short to hedge it. Get out at the market; take your loss and wait for another opportunity.
23. Never change your position in the market without good reason. When you make a trade, let it be for some good reason or according to some definite plan; then do not get out without a definite indication of a change in trend.
24. Avoid increasing your trading after a long period of success or a period of profitable trades.

25. Don't guess when the market is top. Let the market prove it is top.
Don't guess when the market is bottom. Let the market prove it is bottom.
By following definite rules, you can do this.

26. Do not follow another man's advice unless you know that he knows more
than you.

27. Reduce trading after first loss.; never increase.

28. Avoid getting in wrong and out wrong; getting in right and out wrong; this
is making double mistakes.