June 1, 2009

“Whipsaw” song

From Ed Seykota’s “Whipsaw” song…His 6 Trading Rules:

1) Ride your winners
2) Cut your losses
3) Manage your risk
4) Use stops
5) Follow your system
6) Trash the news

Q: What do you do when you get whipsawed?
A: One good trend pays for them all.

Q: What do you do when you get a loss?
A: Kill it.

Q: How do you know when the risk is right?
A: You make a lot of money AND you sleep well at night.

Q: What do you do when the price breaks through (support and/or resistance)?
A: There is nothing to do because the stop (buy and/or sell) is there.

Q: What do you do when a drawdown comes and it gets real big?
A: Stick to the plan, pull the trigger.

Q: What do you do with a hot news flash?
A: Stuff it in the trash.