"Trading Habits: 39 of the World's Most Powerful Stock Market Rules" by Steve Burns and Holly Burns book is divided into 3 parts as the foundation, mind over emotion and the keys to probability.
As the name suggest this book shows the habits that you need to get sucess in trading
In this blog, i am mentioning all Rules that will help you to understand the content of book.
Rule 1 to 15 (The Foundation)
Rule 1
A winning trading system must either be designed to have a large winning percentage, or big wins and small losses.
Rule 2
Your trading system must be built on quantifiable facts and not opinions.
Rule 3
Look for low risk, high reward, and high probability setups.
Rule 4
The answer to the question, “What’s the trend?” is the question, “What’s your timeframe?
Rule 5
Start with the weekly price chart to establish the long term trend, and then work down through the daily and hourly charts to trade in the direction of that trend. The odds are better if you’re trading in the direction of the long term trend.
Rule 6
The more times a support or resistance level is tested, the greater the odds that it will be broken. Old resistance can become the new support, and the old support may become the new resistance.
Rule 7
Moving averages can quantify trends and create signals for entries, exits, and trailing stops.
Rule 8
Bull markets have no long term resistance, and bear markets have no long term support.
Rule 9
The larger the market gaps, the greater the odds of continuation and a trend
Rule 10
The last hour often tells the truth about how strong a trend truly is. “Smart” money shows their hand in the last hour, continuing to mark positions in their favor. As long as a market is having consecutive strong closes, look for an uptrend to continue. The uptrend is most likely to end when there is a morning rally first, followed by a weak close.
Rule 11
Above the 200 day is where bulls create uptrends. Bad things happen below the 200 day; downtrends, distribution, bear markets, crashes, and bankruptcies.
Rule 12
It is much easier to watch a few than many.
Rule 13
Trends never turn on a dime. Reversals build slowly. The first sharp dip always finds buyers and the first sharp rise always finds sellers.
Rule 14
Successful trading is about consistently doing the difficult thing so often that it becomes second nature.
Rule 15
The best trades work almost right away.
Rule 16 to 27 (Mind over Emotion)
Rule 16
Wishful thinking must be banished.
Rule 17
Money is made by discounting the obvious and betting on the unexpected.
Rule 18
A losing trade costs you money, but letting a losing trade get too far out of hand can cause you to lose your nerve. Cut losses for the sake of your nerves and your capital.
Rule 19
Never trade position sizes so large that your emotions take over your trading plan.
Rule 20
Trade the market, not the money.
Rule 21
When there’s nothing to do, do nothing.
Rule 22
Trade what's happening...not what you think is gonna happen.
Rule 23
Develop systems based on the kinds of “pain” (weaknesses) endured when they aren’t working or you’ll abandon them during drawdowns.
Rule 24
Remain flexible and go with the flow of the market price action. Stubbornness, egos, and emotions are the worst indicators for entries and exits.
Rule 25
A trader can only be successful after they have faith in themselves as a trader, their trading system as a winner, and know that they will remain disciplined.
Rule 26
One thing I have learned over the years trading is that crisis = opportunity.
Rule 27
Going up on bad news or down on good news are among the strongest market tells.
Rule 28 to 39 (The Keys to Profitability)
Rule 28
Manage losses and maximize gains.
Rule 29
The key to long-term survival and prosperity has a lot to do with the money management techniques incorporated into the technical system.
Rule 30
Be disciplined in risk management and flexible in perceiving market behavior.
Rule 31
Position sizing can be correlated to the quality of a trade setup.
Rule 32
Never lose more than 1% of your total trading capital on any one trade
Rule 33
First find the right stop loss level that will show you that you’re wrong about a trade, then set your positions size based on that price level.
Rule 34
Never lose more than 3% of your total trading capital on your worst day.
Rule 35
When I am trading poorly, I keep reducing my position size. That way, I will be trading my smallest position size when my trading is worst.
Rule 36
Losers average losers.
Rule 37
Never allow a statistically significant unrealized gain to turn into a statistically significant realized loss.
Rule 38
Understand the nature of instability and adjust your position size for the increased risk due to volatility spikes.
Rule 39
Place your stop losses outside the range of noise so you’re only stopped out when you’re wrong.
I hope you all understand the overview of this book. I recommend every trader should read this complete book that help you for successful career in stock market.
This book is available on Amazon.
Also see: New Trader Rich Trader (Review)
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