Like most people I redo and edit my trading rules when I get frustrated. Overall trading has been going very well for me this year, but frustrated lately by a lot of the same issues and I think my too diverse trading rules may be partially to blame. Its very easy to come up with or copy a bunch of trading rules but once they sprawl out so much I think its difficult to remember them all and be disciplined about following them all.
So I’ve decided to dial it back to a list of 10. I could probably do more, maybe less but I like the idea of constraining myself to a manageable number that can be re-read daily and have pinned to my desktop.
I also wanted to focus on being more of a day trader and being in cash each night. The majority of my success comes from day trades. The majority of my failures, holding losers overnight. I’ve become so conditioned to hating overnight holds that even when I’m holding a winner I get anxiety. On nights that I’m in cash I’m so happy and will literally say to myself “Yep, I’m in cash mother fucker.” and smile. A perfect example is a day like today, I held overnight and got bought in, while a manageable loss I thought about this stock all night, got up this morning dwelling on it, then got the email I was getting bought in. It then botched my prep mentally pre market and I’ve been dwelling on it all day.
Had I followed my “revised” trading rules all of this anxiety and wasted mental energy would be gone. I’m so much happier when I “Nail and Bail” even if its a loss, the longer I hold a stock, again even if its a winner, the more annoyed and aggravated I get.
So this rule set has been built to focus on what I do best, what I enjoy doing most and constrain me more.
If you are familiar with my friend and mentor @investorslive you will notice this list is built around and inspired by some of his favorite rules. Giving credit here so I don’t get accused of plagiarizing 🙂