Think & Trade Like a Champion: The Secrets, Rules & Blunt Truths of a Stock Market Wizard

I have some general guidelines as to when I raise my stop above the initial placement. Any stock that rises to a multiple of my stop-loss and is above my average gain should never be allowed to go into the loss column. When the price of a stock I own rises by three times my risk and my gain is higher than my average, I almost always move my stop up

The reason most investors fail to sell and cut their loss short is because they fear that after they sell the stock might go back up and they will be wrong twice. It’s driven by the fear of regret, which stems from pure ego!

The first rule is to never put your entire account into just one stock; that would be taking too much risk. If you have hopes of making a short-term killing by risking it all, you’re liable to be the one killed!

moves. One or the other must be adjusted to dial in the correct amount of risk. For argument’s sake, if you wanted to be very aggressive and put 50 percent of your account into one position, you would need to use a 5 percent stop to contain your risk as a percentage of equity to 2.50 percent. But the tighter your stop, the more likely you are to ge

Either your stop moves or your position size

at $5,000. But that’s 5 percent of the total equity of your account—and that’s too much risk. If you were to suffer a string of such losses, you would put yourself at risk of ruin. Instead of arbitrarily picking a number, your maximum risk should be no more than 1.25 to 2.5 percent of your equity on any one trade. The less experienced you are, the

In trading and in life, how you deal with losing is the difference between mediocrity and greatness. Remember, losses are a function of expected gain. The key is to keep your losses less than your gains; always think risk versus reward and base your risk on the reality of your trading results. If you can get a reasonable idea of what your gains wil

If I get stopped out at breakeven, I still have my capital—nothing gained but nothing lost. You may feel dumb breaking even on a trade that was once at a profit; however, you’ll feel a lot worse if you turn a good-size gain into a loser.

On the other hand, if you want to achieve superperformance, diversifying your portfolio too much is counterproductive.