Bitcoin & Altcoins : 20 Trading rules

20 TRADING RULES AND MARKET OBSERVATIONS

ENTERING TRADES:

Differentiate between major trades and short-term trades. Remember that the risk on short-term deal need to be significantly lower then on long-term deals. Also notice, that you need to choose long-term positions more often, because long-term deals are most important for successfull trading.
When looking for a major reversal in a trend, it is usually wiser to wait for some pattern that suggests that the timing is right rather than fading the trend at projected objectives and support/resistance points.
Don’t let the fact that you missed the first major portion of a new trend keep you from trading with that trend.

EXITING TRADES AND RISK CONTROL:

Decide on a specific protective stop point at the time of trade entry.
If selling into resistance or buying into support and the market consolidates instead of reversing, get out.
Fight the desire to immediately get back into the market following a stopped-out trade.
When trading is going badly: (a) reduce position size; (b) use tight stop-loss points; (c) slow up in taking new trades.
When trading is going badly, reduce risk exposure by liquidating losing trades, not wining trades.

HOLDING AND EXITING WINNING TRADES:

Do not take small, quick profits in major position trades. In particular, if you are dramatically right on a trade, never, never take profits on the first day.
If an objective is reached, but you still like the trade, stay with it using a trailing stop. This rule is important in order to be able to ride a major trend. Remember, patience is important not only in waiting for the right trades, but also in staying with trades that are working. The failure to adequately profit from correct trades is a key profit-limiting factor.

MISCELLANEOUS PRINCIPLES AND RULES:

Always pay more attention to market action and evolving patterns than to objectives and support/resistance areas. The latter can often cause you to reverse a correct market bias very prematurely.

MARKET PATTERNS:

Narrow market consolidations near the upper end of broader trading ranges are bullish patterns. Similarly, narrow consolidations near the low end of trading ranges are bearish.
Play the breakout from an extended, narrow range with a stop against the other side of the range.
A common and particularly useful form of the above rule is: flags or pennants forming right above or below prior extended and broad trading ranges tend to be fairly reliable continuation patterns.
Curved consolidations tend to suggest an accelerated move in the direction of the curve.
A failed signal is more reliable than the original signal. Go the other way, using the high (or low) before the failed signal as a stop.

ANALYSIS AND REVIEW:

Review charts every day.
Religiously maintain a trader’s diary.
Maintain a patterns chart book.
Review and update trading rules, trader’s diary, and patterns chart book on a regular basis.

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