Even the best traders make mistakes and Tim from Slope of Hope is more transparent than most about sharing his so that others can learn without having to pay tuition. His latest post is worth studying, I thought, so here's the repost:
"My three trading rules have been up for a long time, but there are a couple of things that bugged me about them. First, there were some new rules which I really wanted to integrate, since I felt they were important. And second, I ignored "the only exit price is a stop price" rule so often as to render it a farce.
I have therefore updated my rules and expanded the list to seven. Take a look and let me know what you think. {His rules are posted immediately below this quote. Lady}
As an aside, one critical new rule for me is with respect to sizing, because that's where I screwed up with FAZ. I normally have straight equity positions sized at about $10,000 each. I went ape-sh*t with FAZ and bought (hanging head in shame) $150,000 of this crap among three different accounts. That. Was. Stupid.
Sure, if FAZ had a FAS-style day today, it would seem great, but missizing like this is lunacy and very damaging. Never again!"
http://www.slopeofhope.com/
Tim's Trading Rules:
"It has cost me a huge amount of money to formulate these "trading laws", and I offer them up - as I do everything on this blog - for free, with the hope that it will help some of you. If one day I can follow these rules absolutely consistently, I'll be a much richer trader for it. Behold: Opening Bell - no new positions should be initiated in the first 30 minutes of any trading session.
Advantage - only enter into a position which provides you a significant advantage of reward versus risk.
Sizing - position sizing must be consistent among instrument types irrespective of anticipated opportunity.
Stops - a stop price must be in place at all times for all positions.
Freshness - positions should be regularly updated for the sake of updated stops and the retention of position sizing.
Exits - the only acceptable exit is either being stopped out of a position or reaching a target price which has a clear technical rationale, and even in cases of the latter, partial exits are preferable to outright closes.
Emotional Awareness - use emotional awareness to your advantage, understanding fear often accompanies reversals in your favor and hubris often accompanies reversals against your positions.
Following these rules consistently isn't easy. But every year I get a little better at it, and every year I do better in my trading. I urge you to consider making these rules an important part of your trading life."
http://slopeofhope.com/site/my_three_rules.htm
Lady