The “Not-So-Simple” Rules of Trading

In book “Just One Thing”(by John Mauldin), Dennis Gartman listed the “not-so-simple”(but really utterly so) rules of trading:

1. Never, ever, under any circumstance, should one add to a losing position… not EVER!
2. Never, ever, under any circumstance, should one add to a losing position… not EVER!
3. Learn to trade like a mercenary guerrilla.
4. Capital is in two varieties: Mental and Real, and, of the two, the mental capital is the most important.
5. The objective of what we are after is not to buy low and to sell high, but to buy high and to sell higher, or to sell short low and to buy lower.
6. Sell markets that show the greatest weakness; buy markets that show the greatest strength.
7. In a Bull Market we can only be long or neutral; in a bear market we can only be bearish or neutral.
8. “Markets can remain illogical far longer than you or I can remain solvent.”
9. Trading runs in cycles; some are good, some are bad, and there is nothing we can do about that other than accept it and act accordingly.
10. To trade/invest successfully, think like a fundamentalist; trade like a technician.
11. Keep your technical systems simple.
12. In trading/investing, an understanding of mass psychology is often more important than an understanding of economics.
13. Do more of that which is working and do less of that which is not.

I like rule #4, #11 and #13.  And my greatest weakness is in rule #1 and rule #2.
Here is another set of Gartman’s trading rules on investmetu.com.