Stick To Your Trading Rules

To be successful in the long term, investing/trading in penny stocks you must have a set of trading rules and you need to stick with them, if  not you will become the 90% of people who attempt to venture into this sector and never succeed.

I plan on series of blogs in the future regarding the various rules I apply at specific times of the investment cycle, but for now I want to emphasize the importance of having rules.

Having a set of rules means in the long term your returns will be consistent and you are less likely to be in the house of pain worrying all night if you are going to wake-up down another 10%. Its great to have a stock run 200%, but then then next 10 stocks go down 50% ... it sucks BIG TIME giving up all those gains and going from HERO to ZERO.

Having a set of rules means you avoid buying high and selling low ... the opposite of what you should be doing.

Anyone who has been in this game for a while knows what it feels like to wake up in the morning all excited like it is Christmas morning to see your present moving higher, but all to often this does not last long and soon enough you are waking-up to a bad hang over wishing you had not drank the Kool-Aid.

If you don't have rules, then sit down now and start writing them out giving thought to these points.

• Think about if you want to go for short term wins or home runs or both?
• How much do you want to "bet" on a trade?
• Will you average up or down on the trade?
• Do you want to relay on technical analysis to help guide you or fundamentals or both?
• Will you sell a bit at time on the way or down to reduce risk?
• How many hours will you spend learning about market dynamics?

The last couple of months for micro-caps investors have been pretty rough as sell in May and go away this year was not very nice, but it appear now that we are into summer, the selling is starting to subside and we are starting to see a few runners again.

I tweeted this out earlier in response to a tweet and I think it is fitting to end on.

Wealth is created from sticking to your rules and not letting a few exceptions throw you off your game. Be the TURTLE and win long term!