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5 Unsung Trading Rules to Live By

You might not hear about them that often, but they still matter

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#5: The Fewer Trades, the Better

If you’re reading this, you probably enjoy trading. It’s fun, it’s challenging, and it can make money. In reality, however, it should be saved for special occasions. Fewer trades means a higher bar for the trades you do make, and you’ll be more likely to make money.

In a perfect world, the best approach to trading would be to wait for the one or two times a year when the market drops sharply over a period of a few weeks, then go long aggressively to capitalize on the rebound. Ride the rally as far as it will go with rising stops, then move back to cash when the stop is triggered and wait for the next opportunity.

Over time, this approach of making a small number of high-impact trades would — for the all but the very best traders — prove much more profitable than a high-frequency approach.

For many of us, unfortunately, that’s easier said than done.

As of this writing, Daniel Putnam did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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