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Lessons From 2010 Wednesday, January 19, 2011 at 09:30 AM
At the end of every year, I ask members of The Kirk Report to offer their feedback not only about the site itself but also to share some personal perspectives. For example, in the annual membership survey I asked the following question:
“What would you say is the most important thing you've learned about investing and/or trading in 2010?”
Here are some of the more noteworthy responses I received:
~ On Risk Management ~
Trading management is just as important as stock selection.
Think about the risk versus reward before taking any position.
When you’re caught up in the moment take a step back and think.
Capital protection is always the top priority.
Cutting losses is the holy grail.
Don’t play chicken using mental stops. Set hard stops and manage the risk.
Avoid large losses always. Keep loses small and you can survive anything.
There will always be another great investment.
Don’t overpay or be afraid to sell.
No edge means no trade.
Sitting on your hands can often be the best trade.
Don’t participate in the market, just to participate. Make sure the conditions are favorable to your method of trading.
Only losers add to losers.
I used to be an all in and all out trader, but scaling methods have improved my performance.
The trick is to get on board and stay on board until the trade fails.
Limit the number of trades you make every day forces you to be choosy and place better stops.
When you are up the most is when you are most likely to break your rules.
When having trouble dealing with the market, reduce your position size and raise cash.
Proper position sizing is key to risk management.
There are no risk free trades or investments.
The stocks and sectors that are considered safe are usually anything but safe.
Without taking risk, there is no reward.
~ On Strategy ~
Keep it simple. Simple works.
Trade what you see not what you think.
Learn to think for yourself. Trust your gut.
A good trading system must fit both my strengths and time limitations.
Focus on things that help you make money in investing/trading; tune-out all the noise about day-to-day news & opinions.
Follow the price trends rather than the pundits.
Less is more. Learn one “bread and butter” strategy and trade the hell out of it.
Be calm, have a plan, and ride it out through the rough times.
Be flexible & sensitive to what the market is doing rather than trying to tell the market what to do.
The importance of not having and trading a biased opinion.
Execute the plan – don’t just “think” about it.
Trying to pick tops is a sucker’s game.
Price action is king, volumes, divergences, oscillators all come after.
I now consider various scenarios, not just one, and assign percentage probabilities which has made all the difference.
You must fight the feeling that you have a good idea of which way the market is headed.
Don’t overload on technical indicators. Price is the only thing that pays.
When you become an expert of one basic simple trade, results can be truly outstanding.
Let your setups come to you – do not chase. There will always be another day, another setup.
Stay in the course until evidence proves the other way around.
Don’t overtrade. It is the sitting that makes the difference.
Playing both the long and short side of the market is important than just sticking with a long strategy.
Your analysis must involve multiple time periods.
The more time spent at the keyboard, the luckier I get.
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