Barry Ritholtz has assembled an impressive list of trading rules and aphorisms from different sources that are well worth perusing. Trading rules are basically lessons, derived from personal experience. While there is no substitute for making your own mistakes and learning from them, taking into account other people’s lessons is an essential element of anyone’s learning curve.
It is amazing how much could be said with so little. Some of my favorite quotes include:
Valuation alone is insufficient reason to get short a stock — History teaches us that cheap stocks can get cheaper, dear stocks can get more expensive
ALWAYS work with a pre-determined loss – either a physical or mental stop loss — Never leave yourself open to infinite losses
Fundamentals tell you WHY to short something, not WHEN to short it. ALWAYS have some technical confirmation before shorting. Make a short selling wish list, then WAIT for technical confirmation.
