Trade to win - pearls of wisdom

Notes from: Trade to win : proven strategies to make money / Thomas L. Busby with 

Patsy Busby Dow.

PEARL 1 When prices are trading at their highs, they tend to make higher highs, and when they are trading at their lows, they tend to make lower lows.

PEARL 2 Think of trading as a journey. Enjoy the trip and continuously learn from it.

PEARL 3 The market is open 24 hours a day. Learn how to take advantage of it.

PEARL 4 Record prices on the first day of the year. This helps you trade with the winners.

PEARL 5 When a stock crosses the $100 price, it will typically go to $110. This also works for stocks crossing the $200 line.

Seven Sisters

1. S&P 500 futures (ES)
2. Dow 30 futures (YM)
3. Nasdaq 100 futures (NQ)
4. Dax futures (DAX)
5. Gold futures (GL)
6. Oil futures (CL)
7. Bond futures (US)

PEARL 6 Do not worry about the direction the market goes. Go with the market.

The Steps to Win

I. Evaluate the Seven Sisters

1. S&P 500 futures

2. Nasdaq 100 futures

3. Dow 30 futures

4. Dax futures

5. Gold futures

6. Oil futures

7. Bonds

II. Gather Important Numbers

1. Yearly opens

2. Monthly opens

3. Weekly opens

4. Daily opens

5. Bars of reference (high and low in the following 30-minute time frames):

3:30-4:00 PM 

3:30-4:00 AM 

8:30-9:00 AM 

12:30-1:00 PM

III. Check the Economic Calendar

1. Record important news items.

2. Look at a 24-hour trading day.

3. List each important news event by date and time.

4. Be ready to make money when the time comes.

IV. Execute a Winning Strategy

V. If No Direction Can Be Identified—STAY OUT OF THE MARKET!

PEARL 7

Chicken, fish, or steak? Make a decision and move on it.

PEARL 8

Every Wednesday a crude oil report is released at 9:30 AM. There are premarket trading opportunities in the crude sector the morning of the announcement.

PEARL 9

Crude oil tends to have a negative close on the last trading day of the month.

PEARL 10

Know when important economic data is being reported. Then use that information to make money.

PEARL 11

The night of the presidential election offers great trading opportunities after 7:00 PM central time.

PEARL 12

Markets respect news. You should, too.

PEARL 13

The Model “T” provides opportunities to trade stock, futures, and options for three days after the Fed announcement.

PEARL 14

The 6:00 AM price on the Dax futures is the most important price in the Dax for that day of trading. It may be used as a pivot to gauge whether the overall market should be up or down for the session.

PEARL 15

Be open-minded and continue to learn.

PEARL 16

Thanksgiving Day tends to have one of largest percentage up days of the year.

PEARL 17

The week of December 26 through January 1 is the best trading week of the year.

Market Generalizations for Consideration

PEARL 18

The market usually reverses its trend after July 4th.

PEARL 19

When overall market prices have risen 2.5 percent during any session, do not go short.

PEARL 20

Like your stock choices, but do not marry them. When they stop paying, it is time to split.

PEARL 21

If the general market is moving up and your stock is not, you have a problem. Specifically, if the overall market moves up by 2 percent and your stock is moving down—get out!

PEARL 22

Stocks that have been the most bullish typically fall the fastest in a downtrending market

PEARL 23

Take losses more quickly than profits.

PEARL 24

Always use a stop.

PEARL 25

When you hear someone say, “You do not go broke taking profits,” RUN. That is exactly how it happens.

PEARL 26

When entering a position, always know where the exit resides.

PEARL 27

Never risk too much with any trade. No trade is worth losing more than 10 percent of your account balance.

PEARL 28

Overtrading makes you lose—don’t lose.

PEARL 29

Some days, your best trading decision may be to stay in bed.

PEARL 30

Learn how to win from your losing trades.