TLAB Best Practices - 2018

TLAB Best Practices - 2018

Hey y’all, Sammy (@SamirPandurangi) here.

To start the new year off right, I’d like to share a few nuggets of wisdom I’ve learned over the past year that have helped my trading immensely. Some of these I’ve had to learn the hard way (by losing money, that is) and some I’ve been fortunate enough to learn ahead of time from TLAB and my twitter friends.

I’m calling these TLAB Best Practices because they also represent core trading values of the TLAB crew.

Hope it helps others out there. Here’s to a great trading year ahead! Cheers!

1. Always have an entry, stop and target in mind before entering a trade
2. Adapt to market conditions - choppy/uptrend/downtrend - e.g. a strategy appropriate for a strong bull market will most likely end up stopping out and frustrating swing traders in a choppy one. If you don’t have an appropriate strategy for the type of market you are in, stay out.
3. K.I.S.S. - keep it super simple - don’t overload indicators or worry too much about fundamental analysis— price patterns and volume are kings.
4. Order of importance:

1. Risk Management (first determine stop based on chart then position size accordingly based on max risk per trade)
2. Trade Management (determines sell points and moving stops)
3. Entry
4. No revenge trading. You could see short term gratification, but it’s bad for long term results.
5. When starting out, trade small (0.5-1.0% risk per trade max). This helps keep emotions and psychology under control. Once you develop a system that’s consistently profitable, you can always increase size gradually.
6. Stick to one or two chart patterns and master them when starting out. You can gradually add more patterns to your trading as you gain experience.
7. After some experience with 1 or 2 patterns, make sure you are familiar with at least the top 10 bullish/bearish chart patterns. Learn how to recognize them in a real chart so you understand how to see a pattern and block the noise.
8. Always trade with the trend. Trading against momentum (looking for reversals on a hot/bleeding stock when there is huge momo) is not a good idea in most cases.
9. Don’t worry about catching the absolute bottom or exiting at the absolute top for a trade. Focus on capturing the majority of the trend move.
10. Don’t hold through earnings unless you have a huge cushion to ride through volatility. Otherwise, it’s pretty much gambling.
11. Never chase gap ups/downs. There will always be more setups to trade.
12. When starting out, focus on daily charts for setups and look at weekly/monthly for confirmation of a good setup. Lower time frames are just noise and end up confusing beginning swing traders.
13. Don’t add to losing positions. It may work at times, but in the long run, you'll only end up increasing your losses.
14. Don’t lower your stop loss if your trade is not doing well. This short term gratification leads to long term losses.