Rules 7 & 8 of My 10 Favorite Trading Rules

By Chris Rowe May 18, 2015 Facebook Logo Twitter Logo Email Logo LinkedIn Logo

Rule #7:  Don’t be a hero

A kid chases a ball across a highway.  He gets it.  He lives happily ever after.  Was it a good bet to make?

If you bought at the low or if you sold at the high then while some may tell you that you made a "great trade", you actually made a very foolish bet.

"Winning" doesn't mean you made a good bet.

It’s smart to buy a stock after it’s proven itself to be in strong hands and to have demand.  The only way we know if this is the case is to see the stock start to advance. If you see the market clearly, then you will already have your eye on stocks that will likely start to advance. It’s only after that advance starts that you should be a buyer.  Thus, you should never be able to buy at the low.

The same is true for selling at the high (at a bullish profit or to initiate a bearish position).  If you ever sell at the absolute high then you probably made a mistake.  Hey, it happens.

Rule #8:  Internals are key

Market "internals"are the epitome of the "True Market".

The major indices that everyone follows (Dow Jones Industrial Average, S&P 500, etc.) don’t paint a clear picture of what’s going on in the stock market.  Thank heavens everyone in the market is so confused or else it would be that much more difficult for us to make money.

Follow the internal market, which gives equal weight to all stocks within a group. Internals lead the indices that everyone else is following.  There are weak internal indicators and there are STRONG internal indicators.  The strong ones are responsible for the wealth that I have built for myself.  They include the "Bullish Percent Index", the “Percentage of Stocks Above Their 30-week moving average” (yes that’s an indicator), and the “Percentage of Stocks Above Their 10-week moving average”.

These indicators can all be found in "TAM Tools".  For more information on TAM Tools, email us at