1. Enter strong stocks when stochastics are oversold.
2. Make sure volume confirms entries.
3. Analyze the top and bottom 20 sectors every Sunday.
4. Keep a daily list of stock breakouts and breakdowns.
5. Do not let your watchlist get too big.
6. Weed out your watchlist on a weekly or monthly basis.
7. Keep it simple. Complexity leads to wasted time and subpar results.
8. Watch for OBV divergences.
8. Make sure uptrends are on strong volume.
9. Always journal why you entered a trade the same day you enter it.
10. Review completed trades monthly.
11. Pay attention to market sentiment.
12. Check S&P support and resistance levels daily.
13. Do not confuse breakouts of support or resistance with breakouts that are within a range.
14. Manage risk with stops and targets, and stick to the plan.
15. Master a basket of 5-10 different trading setups that will work in different markets.
16. Never chase a stock.
17. Ignore the pundits, news, media and dare I say it, some bloggers.
18. Stick with your own analysis, so long as you have well tested setups.
19. Create a "daily prep report" for each trading day.
20. Become a slave to price, volume and support and resistance levels.
21. Unless you daytrade, do not watch every tick.
22. Let your stops and targets work for you.
23. Do not "micro-manage" trades.
24. Understand your own trading psychology.
25. It gets a bad rap, but I believe in "paper trading" as a learning tool.
26. Read everything, but accept nothing.
27. Do not get discouraged by a few bad trades.
28. Manage risk by position sizing.
29. Only take your best trades
30. Learn when not to trade.
31. Never allow fear or greed to consume your trading.
32. Trust your setup.
33. One last time: PRICE, VOLUME, SUPPORT and RESISTANCE
34. Stocks do not go up or down in a straight line.
35. Study past market winners and losers
Trading Tactics
Once in a while I take time to review old handwritten notes I've taken from the books I've read in the past including from Loeb. These notes often serve as inspiration to my own trading. Even though I've read them many times over the years, they always offer a good insight.
Loeb's Trading Tactics:
- The market is a battlefield. Make sure you are on the winning side
- You must trade with the actions of the market and not simply by how you might think the market should trade
- Knowledge through experience is one trait that separates successful stock market speculators from everyone else
- To do well in short-term trading, it takes full-time attention and dedication
- Exploit all new trends quickly and aggressively
- The best traders are usually psychologists. The worst are usually accountants
- Stocks act like human beings and go through the same stages and phases as people do, including infancy, growth, maturity, and decline. The key in trading is to be able to recognize which stage the stock is in and to take advantage of that opportunity
- Successful traders are intelligent, they understand human psychology, they practice pure objectivity, and they have natural quickness
- To succeed in trading you must 1) aim high, 2) control the risks, and 3) be unafraid to keep uninvested reserves and be patient
- The stock market is more an art than a science and far more complex than most people understand
- It takes considerable amount of self-control to trade well
- The more experienced and successful you become, the less you should diversify
- Big money is always made in the market's leaders
- The best stocks will always seem overpriced to the majority of investors
- Resist the urge and temptation to change your strategy for each and every different market cycle
- Traders should always close a trade when good reasons exist to do so
- Tops in stocks usually occur when the advance in price stalls as volume or activity increases, or if the prices decline and the activity increases
- A sell signal occurs when a stock rises sharply on big volume but ends the day at no gain or at a loss
- Every new market cycle produces a new list of fresh leaders
- Pyramid your buys - start with an initial position and then add to it only if the trade moves in your favor
- Stocks are always way overvalued in a bull market and way undervalued in a bear market
- Expectation, not the news itself, is what moves the market
- What everyone else knows is not worth knowing
- Three basis elements should be considered when evaluating a stock - 1) quality (fundamentals, liquidity, management), 2) price, and 3) trend (the most important)
- Always sell when you start patting yourself on the back for being smarter than the market
