Trading Rules that Work – The 28 Essential Lessons Every Trader Must Master

                         – By Jason Alan Jankovsky 

I just finish reading this book, and like it very much. My favourite is rule #9 Don’t over trade. Here are some quotes:

“…overtrading is a symptom of a trader’s impatience with the opportunity he has selected or frustration over the results he has achieved.”

“overtrading is a function of not understanding your time frame properly, not following you rules to begin with, or not following your trade system properly.”

“The symptom of overtrading is often subtle so that by the time you are willing to admit you are doing it, the damage is done.”

 The author also gives some advices on how to overcome your issues with overtrading, take a look, it might be very helpful to you.

Other rules like “Your first loss is your best loss”, “know the limits of your analysis”, “be a student of yourself” are very good too. Overall, this book could act as a trading guidelines for novice traders and a self-examiner for professionals. Strongly recommended.

Happy Learning! Happy Trading!

The Fed lowered its lending rate to 3.25% during the weekend, it is a “surprise” to me, but since help the banks is in their job descriptions, I have to see they are gonna dead trying. The Easter is around the corner, this is a four-day week, but it won’t be easy.Monday, the market will react to this lending rate cut at least in the morning, and accompany by the economic data such as industrial production and Housing Market Index, I don’t think it will be quiet day. On Tuesday, there are Housing Starts and PPI in the morning, FOMC announcement in the afternoon, it gonna be another wild day. I don’t want to predict if there will be any rate cut AGAIN, or how much of a percentage point, will see. There won’t be much happening on Wednesday, market may go soft here, but you can’t. As on Thursday, it is the famous Quadruple Witching. No matter what happens during the week, take it easy, and happy holidays.

CHEERS

The market did not do well as I what expected in my previous post, I expect to see some bullish sign in the market before the Fed announcement. Now with the surprise lending rate cut and a possible interest rate cut on Tuesday, I really not sure, what should I expect, the chart of XLF looks so beaten down, it might rise on Monday to react on the lending rate cut, but I don’t know where will it go throughout the week. The following are the three weekly chart of SPY, QQQQ and GLD.

1.  2.  3.

1. SPY: Although the SPY still managed to close above its weekly 200 EMA, there wasn’t any bullish sign either, unless you want to consider that weekly doji candle as one. For this week, we have two points to watch, bearish point is below 129 the 200 EMA, and the bullish point is above 135. Remember, we are still in the range, we haven’t reach a new low yet.

2. QQQQ: In contrast to SPY, Qs reached new low this week, although it still managed to close above its support @ 42$. Also Qs is below its 200 EMA, which i think it is at more bearish point compare to SPY. So Let’s see if the FED is able to help the NASDAQ this week.

3. GLD: Bravo! A new high. The dollar is keep weakening (thanks to the FED), when your mom and girl friend both in the water, which one would save first, I guess the Fed is on working save its girlfriend first. Good luck to the shorts, and longs… BULL YA!

Happy Trading & Holidays!

A hectic week ahead, many major economic data are awaiting to be announced. Exiting Home Sales on Monday, PPI Tuesday, Durable Good Orders and New home sales on Wednesday; GDP and Jobless Claims on Thursday; Personal Income Outlays on Friday. Uncle Ben will have a speak on Monetary Policy during the week too. If you are in cash position and have no interest to do any day trading. I have two books here to recommend.

1. Active Value Investing by Vitaliy Katsenelson

The author divides the book into two parts. The first part of the book is mainly about some historical market data in BULL, BEAR and RANGE-BOUND markets. The second part of the book, the author illustrates the keep steps in value investing, especially in Range-bound markets, what you as an investor should know and do, and how to adopt the QVG framework into your stock investing strategies.

Here are some quotes from the book,

“just because one fool found a bigger fool to buy a cow for a ridiculous price doesn’t mean that’s what the cow is worth. Knowing what happened in the past doesn’t tell us what will happen tomorrow.”

“Though in theory there is no difference between dividends and stock buybacks, in practice there is.”

“Having a disciplined selling process cannot be emphasized enough in the range-bound market. An investor without a sell discipline is similar to a highway with on-ramps but no exits.”

2. Full of Bull by Stephen McClellan

A book full of insights for long-term investors. The author specifically said in the book, the book is not for short-term traders. However, I still love it. Even though I never hold a stock longer than a year, I still enjoy reading it.

This quote is on the cover which is one of the reason I bought the book.

“Do what Wall Street does, not what it says, to make money in the market”

In this week, I will keep following the stocks I mentioned in my previous posts. No specific ideas yet, as the trend is not clear, (or you can call it the bear trend) But I just don’t really believe it. We might start trading side ways after this week. So will see.

Good Luck and Happy Trading/Reading!

This week I will not discuss any stocks, as the market will be very volatile in this week. Many companies report earnings, a good number of economic datas will be announced, and the market is expecting another rate cut from FED. So rather than predicted any bullish or bearish movement, I’d rather do some day trading and react to what happens in the market.

Economic Data & Company Earnings:

Monday: New Home Sales @ 10AM ET

American Express, McDonald, Verizon …

Tuesday: Durable Goods Sale @ 8:30 ET, Consumer Confidence @ 10 AM, FED meeting begins

3M, Burlington Northern, Canadian Pacific Railway, Dow Chemical, United Steel, Yahoo…

Wednesday: GDP @ 8:30 ET, FED announcement @ 2:15 ET

Amazon, Fidelity Financial, Honda Motor, Boeing, UPS…

Thursday: Personal Income and Outlays @ 8:30 ET, Employment Cost Index @ 8:30 ET, Jobless Claims @ 8:30 ET

Electronic Arts, Google, MasterCard, Procter & Gamble, SONY, New York Times…

Friday: Employment Situation, ISM Manufacture Index, Construction Spending

Chevron, Exxon Mobile, Nissan Motor…

Sometimes cash position is way better!

Happy Trading and Good Luck!

This week I will still be following the stocks I mentioned in the previous posts. (cats, nws, twx, aap, avr, mgi, xlnx, swks, cmc, nyt). In the meanwhile, there are some news that I think are worth to read before the market open on Monday.

1. Busy Trading Week Ahead: What’s next for US dollar?
2. Visa files for $10 billion IPO
3. Weekend Reading
4. Investors brace for more bad bank news
5. Stocks set for more weakness next week…

The drastic sell off on Friday, inevitably left some questions in investors’ mind. Will the sell off lead to market correction? Will corporate earnings save the Bull? How bad is US economy? As a trader, I hate to do predictions here, and neither do I have the expertise or luck to make any judgments. I always (or try to) have a neutral sentiment toward the overall market condition, there is nothing else I can do, but to react to what is happening in the financial market…

Major corporate earnings announcements date:

Monday: American Express, Apple, Canadian National Railway, Texas Instruments, more…

Tuesday: AK Steel, Amazon, Ameritrade Holding, AT&T, BNSF, The New York Times, more…

Wednesday: CME, ConocoPhillips, Boeing, Nasdaq, more…

Thursday: Apache Corporation, Baidu, Black & Decker, CNET, EnCana, Microsoft, Motorola,Pinnacle West Capital, Dow Chemical, more…

Friday: Countrywide Financial, Shaw Communications, Waste Management, more…

Major Economic Events (Eastern Time):

Monday: No major Economic events.

Tuesday: State Street Investor Confidence Index, 10:00

Wednesday: Existing Home Sales, 10:00; Petroleum Status Report 10:30

Thursday: Durable Goods Order, 8:30; Jobless Claims, 8:30; New Home Sales, 10:00

Friday: Consumer Sentiment 10:00

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