1) My number one trading rule is: PROTECT YOUR CAPITAL. Always think defense first. If you don’t protect your money, you’ll have nothing to trade with when a new rally begins.
2) Just as important is PROTECTING CONFIDENCE. Too many traders get killed and chopped to death during corrections. Unfortunately, when the new uptrend begins, they have little confidence and can’t “pull the trigger.” In other words, they hesitate, take smaller-than-normal positions, or even worse…they pass on great setups all together because their confidence it shot. Keep your head up, learn from your mistakes, and focus on the positives.
3) I used to get depressed during corrections and think: “We’re never going to have a healthy market again!” Don’t get down, we’ll have another rally. Just BE PATIENT and keep a strong watch list.
4) Never forget: THERE’S MORE TO LIFE THAN TRADING. Take advantage of corrections by spending more time with your loved ones, enjoying the outdoors, and living a fulfilled life. No one on their death bed ever wished they spent more time in the office.
5) One thing I can GUARANTEE: WE WILL HAVE ANOTHER STRONG UPTREND. When? I have no idea. It could start in 2 weeks, 2 months, or next year. And guess what? After that uptrend, we’ll have another correction. It’s all part of the market cycle. Nothing changes.
“There is nothing new on Wall Street. What has happened in the past will happen again and again and again. This is because human nature does not change, and it is human emotion that always gets in the way of human intelligence. Of this I am sure.” — Jesse Livermore