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Stuart Walton’s Trading Rules

Stuart Walton’s Trading Rules

He was profiled in Schwager’s Stock Market Wizards. His average annual return of 8.59% from 2002 to 2014 beats the market, though nothing to write home about. In the 13 years, 5 were down years. This compares to his 115% average annual return from 1991 to 1999.

Stuart Walton’s trading rules:

• Be patient – wait for the opportunity.
• Trade on your own ideas and style.
• Never trade impulsively, especially on other people’s advice.
• Don’t risk too much on one event or company.
• Stay focused especially when the markets are moving
• Anticipate, don’t react.
• Listen to the market, not outside opinions.
• Think trades through, including profit/loss exit points, before you put them on.
• If you are unsure about a position, just get out.
• Force yourself to trade against the consensus.
• Trade pattern recognition.
• Look past tomorrow; develop a six-moth and one-year outlook.
• Prices move before fundamentals.
• It is a warning flag if the market is not responding to data correctly.
• Be totally flexible; be able to admit when you’re wrong.
• You will be wrong often; recognize winners and losers fast.
• Start each day from last night’s close, not your original cost.
• Adding to losers is easy but usually wrong.
• Force yourself to buy on extreme weakness and sell on extreme.
• Get rid of all distractions.
• Remain confident – the opportunities never stop.

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