Alexander Elder

Get in slow but get out fast.

Design a trading system that gives signals relatively infrequently and allows you to enter markets during quiet times. Use limit orders almost exclusively— except when placing stops.

You have to observe yourself and notice changes in your mental state as you trade. Write down your reasons for entering a trade and the rules for getting out of it, including money management rules. You may not change your plan while you have an open position.

The number of shares or futures contracts bought and sold in any market is always equal.

If you want to buy 100 shares of Google, someone has to sell them to you. If you want to sell 200 shares of Amazon, someone has to buy them from you. This is why the number of shares bought and sold is equal in the stock market. Furthermore, the number of long and short positions in the futures markets is always equal.

Beginning traders try to forecast the future. Professionals don’t forecast; they measure the relative power of bulls and bears, monitor the trend, and manage their positions.

The proper way to draw those lines is to place them so that an oscillator spends only about 5 percent of its time beyond each line. Readjust these lines once every three months.

The Triple Screen trading system allows traders to take buy signals from daily Stochastic only when the weekly trend is up. When the weekly trend is down, it allows traders to take only sell signals from daily Stochastic.

Markets live and move in different timeframes at the same time. No matter how carefully you analyze the daily chart, its trend can be upended by a move that erupts from another timeframe.

The proper way to analyze any market is to review at least two neighboring timeframes. You must always start with the longer timeframe for a strategic view and then switch to the shorter timeframe for tactical timing. If you like using daily charts, you must first examine weekly charts, and if you want to day-trade using 10-minute charts, you first need to analyze hourly charts. This is one of the key principles of the Triple Screen trading system

general market indicators, which analyze the entire market rather than any specific stock. They are worth following because general market trends are responsible for as much as half the movement in individual stocks.