Personal rules

Question 1

When do you trade?

Answer 1

Always after 10:30 a.m., unless the market is making a big move on lots of momentum (in which case, proceed cautiously).

Question 2

What portion of your assets should be traded?

Answer 2

Limit yourself to 15% of your total assets on a single trade idea.

Question 3

Should you try to predict the market direction?

Answer 3

Never. Learn to recognize the prevailing market direction, but never try to predict it.

Question 4

What should you know about algorithms?

Answer 4

Many computer algorithms running the market these days spin off public trader strategies at key price levels. Big money knows it can control price direction, regardless of where the herd is charging at the time. So it implements computer programs that fade the herd’s response in order to trap them and generate quick profits.

Question 5

How many options contracts should you trade?

Answer 5

10 maximum (especially on breakouts that may whipsaw). If the market direction continues, add more. Get as much information as possible on price levels.