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The following guidelines will sound radical, but they have guided me in making my living from trading for many years.
1. If a trade doesn't go your way within first one to five minutes, get out. I usually get out within one or two minutes as soon as my perceived edge is gone.
2.If a trade goes against you in first few seconds, begin drawing in your hard stop and/ or your target, trying to get out of trade at break even.
3. Never let your hard stops get hit. When it happens, you may want to take a break and get some fresh air.
4.Hard stops are adjusted to market conditions. At moment (July 6,2005) I am using 1.50 point hard stops on SP futures.
5. Never move your hard stop away from your entry point, hoping that a bad trade will turn around.
6. If you find yourself *hoping* as you trade, it is a clear sign that you are not following good survival (money management) principles.
It will be impossible to put these principles together without a set of high-probability setups. Without good setups, trading is just a flip of coin.
Mike Reed is author of TradeStalker's RBI Trader's Updates. He has been trading the Market for 23 years. His support and resistance numbers have been published on the internet since 1996. Mike's nightly support and resistance zones are specific and incredibly accurate. He offers an unlimited free trial of his nightly TradeStalker RBI Trader's Updates. http://www.TradeStalker.com