Rules of trade from Jack

Rules of trade from Jack [Shvager]
02 (28) 200204 (30) 200203 (29) 2002
Jack [Shvager] - author of the widely known in the West best-sellers “Of market Of wizards” and “New Of market Of wizards”, in which he generalized the experience of the best traders and the luckiest investors.
The first book Of [shvagera], published in the Russian language, became 800- page volume “proximate analysis. Complete course”, which left in last year in the publishing house “[Alpina] Of [pablisher]”. In its book Of [shvager] was included the quintessence of the wisdom of market - advice to traders. By amiable authorization “Of [alpiny] Of [pablisher]” we published councils into a somewhat reduced periodical version
Beginning of the trade
1. make the difference between the transactions in the river bed of important long positions and the short term transactions. Average risk on the short term transactions (implied by the number of contracts in the position and by exit point) must be considerably less. Furthermore, speculator one should be focused on the trade on the long positions, since they usually are considerably more important for the success of trade. The error, accomplished by many traders, lies in the fact that they so are immersed in the attempts to catch short term market fluctuations (creating the mass of commission payments and slippages), that miss the working motions of prices.
2. if you believe that there is a long-term commercial possibility, do not fall into the greediness in the attempts to reach only the best price of the discovery position. The loss of probable profit from one missed motion of price can overlap benefit from 50 a little the best prices of performance.
3. discovery any long position follows to plan and thoroughly to think over - it never must be instantaneous pulse.
4. find on the graph the model, which indicates that it is precisely now time to open position. Do not initiate transaction without a similar confirmatory figure. (Sometimes it is possible to examine the possibility of transaction without a similar figure, if there is a convergence of many measured motions and levels of the support/of resistance in this price region there exists the well fixed holding point, which does not imply high risk.)
5. place orders, determining their levels with the aid of the daily analysis. If market does not approach the desired level of the discovery transaction, write down commercial idea and reexamine it daily until position is opened or commercial idea ceases to seem attractive. The incapacity to follow this rule can lead to the passage of good transactions.
About the commercial idea they lies in the fact that recall one of the extended cases, when market already left from the implied price of the beginning of transaction, and it is then already difficult to complete the same transaction on the worse price.
6. with the search for the turns of scale trends should be waited the appearance of any [razvorotnykh] formations, but not to open position against the trend at the purposeful levels or on the lines of the resistance/of support. This rule, in particular, is important in the case of the market, on which were achieved long-term maximums/minimums (for example, maximum/the minimum beyond the limits of the price range of the previous hundred days). You remember that in the majority of the cases of prolonged trends the market will not form the turns of V- type. The prices will repeatedly return instead of this in order to again [protestirovat] maximums and the minimums. Thus, the expectation of the forming of [razvorotnykh] formations can avoid exchange on the trifle during the process of forming of apex or cavity, to say nothing of the losses, which can arise, if trend is renewed. Even if market actually forms important V- apex or V- cavity, of the subsequent consolidations (for example, flags) can give favorable relation profit/risk for the moment of the discovery position.
7. if in you, when you look at the graph (especially if you do not think, to what market it relates), immediately appears instinctive impression, follow this feeling.
8. the fact that you missed the substantial part of the new trend, must not retain you from the trade in the river bed of this trend (to those times, thus far you can determine the reasonable holding point of losses).
9. do not play against the bull or bear traps (last [nesrabotavshikh] price formations), even if other reasons impel you to this.
10. never play against the first break in the motion of price! For example, if you want to open position in the direction of correction, and correction is formed on the price break, you do not enter into market.
11. In the majority of the cases instead of the limit orders (usable on the indicated price) use market orders (usable on the current market price). This is especially important with the liquidation of unprofitable position or with the discovery of the position, connected with the favorable opportunities for the long-term transactions, in the situations, when it is important not to miss the current price. Although the limit orders will give a somewhat best price of performance in the overwhelming majority of transactions, this advantage will usually more than overlap with considerably worse prices or by the missed possibilities of obtaining the profit when initial limit order is not completed.
12. Never increase position near the initial entrance point into the tradings after market it was already in favorable for your position territory it returned to the initial prices. Frequently the fact that market completed complete recovery, it is negative sign for the trade. Even if position is still well substantiated, its increase in a similar situation can lead to the premature fixation of losses because of the increased risk during the unfavorable motion of price.