THE NINE RULES OF TRADING

“It’s not the years in your life that count. It’s the life in your years.”  -Abraham Lincoln

A good article in National Geographic got me thinking not only about my own health, but also my own rules to trading.   I’ve attached both the National Geographic article and my 9 rules below.  Enjoy:

The Power Nine: Secrets of long life from the world’s healthiest humans
1. Move: Find ways to stay active

2. Plan de Vida: Discover your purpose in life

3. Downshift: Take a break

4. 80% Rule: Don’t overheat

5. Plant Power: Choose greens

6. Red Wine: A glass a day

7. Belong: Stay social

8. Beliefs: Get ritualistic

9. Your Tribe: Family Matters

The Power Nine: TPC’s 9 rules to successful trading

1. Move: Always be flexible.  The beauty of the stock market is polygamy is perfectly acceptable.  Never get married to a particular position or a particular strategy.   The market is complex, dynamic and always changing.  Learn to change with it if necessary.

2.  Plan de Vida: Always invest with a plan.  Have strict rules and a machine-like approach.

3.  Downshift: Pulling yourself out of the game when you’re not certain will help you from making debilitating mistakes.  When in doubt get out.

4. 80% Rule: Never let more than 20% of your portfolio put 80% of your portfolio at risk.  Position sizing is key to risk management.

5. Hope is a 4 letter word: Holding and hoping is not a strategy.  Cut your losses, learn from it and never look back.   Never ever get into something you can’t get out of.

6. Understand your risks: You can’t avoid black swans, but they don’t have to rip your face off.  Understand your risks and your rewards.

7. Goals and accountability: Set goals and keep track of your performance.  You are responsible for your own decisions.  Own your mistakes.

8. Psychology: Learn to control your emotions and understand the emotions of those around you.  Always remember what General Patton said: “if everyone is thinking the same then someone isn’t thinking”.   Also the famous Buffett quote: “Be fearful when others are greedy and greedy when others are fearful.”

9. Your Tribe: Always remember that there is more to life than investing.  Don’t live to invest.  Invest to live.  Being the richest man/woman in the graveyard is worthless if there isn’t anyone to bury you there.

Do you have some rules of your own?  If so, use the comment section to add to the list.

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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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