Kagan Capital Trading Principles:
“There is nothing like losing all you have in the world for teaching you what not to do. And when you know what not to do in order not to lose money, you begin to learn what to do in order to win. Did you get that? You begin to learn!”
“If a stock doesn’t act right don’t touch it: because, being unable to tell precisely what is wrong, you cant tell which way it is going. No diagnosis, no prognosis. No prognosis, no profits”
Trading Principles:
1) Follow the Trend
2) Intermediate Short-Term
3) Patience
4) No Weeklies
5) Stick to the Plan/Script (Exit Strategy)
6) Duration
7) No Double Dips
8) No Fridays
9) One option at a time
10) No holding through earnings
11) Buy low Implied Volatility/ Sell high Implied Volatility
12) No Amateur Hour
13) No Day Trades
14) Terrible Wednesday
Rule of Thumb:
1) Wait a Day: If you are going to make a trade, maybe wait a day to confirm that what you want to do. Losing out on gains is better then losing.
2) Hedging using a cheap put. If you buy a hundred shares of FB at $27 and you were concerned that the market might turned against you. Instead of selling out of your position for $2,700, you can buy a $27 put for a small price. The $27 put will lock you in at the $27 stock price.
3) Be Comfortable: Most importantly, trade where you are most comfortable. If it doesn’t seem right then don’t trade it. An example has been over the year I have done well in premarkets but never intraday trading. Over time, I made the right decision getting out in the morning with the gains I got from the pre-market.. Sometimes we miss out on bigger gains, but other times sometimes miss out on big loses. Its all about finding your own individual trading style and comfort.