A checklist:
1. Profit in up or down markets. No matter how ridiculous trends might appear early and no matter how insanely extended they might appear at the end, they always go farther than anyone expects.
2. No gut feelings, hunches, or guesses.
3. No prediction. No one can predict a trend; they can only react to one.
4. The big money of letting profits run: at it's best, trend following aims to compound absolute returns. Average is not the goal.
5. Risk management is top priority. Stop losses and limits on leverage are required.
6. Take advantage of mass psychology.
7. Frequency of correctness doesn't matter, but magnitude of correctness. (Stop out of failed trades quickly, ride strong trends for a long time)
My favorite of his many "quick commandments:"
1. Don't fight the tape!
2. There are not good or bad markets. There are up or down markets.
3. Limit losses and ride profits, irrespective of all other rules
4. Don't try to average a losing game
5. Sell what shows you a loss and keep what shows you a profit
6. Courage in a speculator is merely the confidence to act on the decision of his mind.
7. Watch the market with one objective: to determine the direction of price tendency.
8. If you don't know what is going on, don't do anything.
9. Markets are never wrong, opinions are.
10. Controlling risk is no the same thing as avoiding risk.
11. Dream big dreams and think tall. Very few people set goals too high.
12. An ability to shift on a dime is critical when shifting time comes.
13. Fools try to prove that they are right. Wise men try to find when they are wrong.
จากหนังสือ Trend Commandments: Trading for Exceptional Returns
Michael W. Covel (Author)
