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Basic Rules for Futures Traders: Part V

· Don't trade on rumors. If you have, ask yourself this: "Over the long run, have I made money or lost money trading on rumors? O.K. then, stop it.

· Beware of all tips and inside information. Wait for the market's action to tell you if the information you've obtained is accurate, then take a position with the developing trend.

· Don't trade unless you're well financed...so that market action, not financial condition, dictates your entry and exit from the market. If you don't start with enough money, you may not be able to hang in there if the market temporarily turns against you.

· Be more careful if you're extra smart. Smart people very often put on a position a little too early. They see the potential for a price movement before it becomes actual. They become worn out or "tapped out," and aren't around when a big move finally gets under way. They were too busy trading to make money.

· Never add to a losing position. Stay out of trouble, your first loss is your smallest loss.

· Analyze your losses. Learn from your losses. They're expensive lessons; you paid for them. Most traders don't learn from their mistakes because they don't like to think about them.

· Survive! In futures trading, the ones who stay around long enough to be there when those "big moves" come along are often successful.

· If you're just getting into the markets, be a small trader for at least a year, then analyze your good trades and your bad ones. You can really learn more from your bad ones.

· Carry a notebook with you, and jot down interesting market information. Write down the market openings, price ranges, your fills, stop orders, and your own personal observations. Re-read your notes from time to time; use them to help analyze your performance.

· "Rome was not built in a day," and no real movement of importance ends in one day. A speculator should have enough excess margin in his account to provide staying power so he can participate in big moves.

· Take windfall profits (profits that have no sound reasons for occurring).

· Periodically redefine the kind of capital you have in the markets. If your personal financial situation changes and the risk capital becomes necessary capital, don't wait for "just one more day" or "one more price tick," get out right away. If you don't, you'll most likely start trading with your heart instead of your head, and then you'll surely lose.
Always use stop orders, always...always... always.

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