From : Reminiscences of a Stock Operator

Despite "Reminiscences of a Stock Operator" being written in the early 1920s, it continues to be the most useful and most-loved book ever written on the subject of trading and speculation.

In this novel, Edwin LeFevre offers advice that still applies today:

1. Caution.

Excitement (and fear of missing an opportunity) can often
persuade you to enter the market before it is safe to do so.
After a downtrend, a number of rallies may fail before one
eventually carries through. Likewise, the emotional high of
a profitable trade may blind us to signs that the trend is
reversing.

2. Patience.

Wait for the right market conditions before trading. There
are times when it is wise to stay out of the market and
observe from the sidelines.

3. Conviction.

Have the courage of your convictions: Take steps to protect
your profits when you see that a trend is weakening, but sit
tight and do not let fear of losing part of your profit
cloud your judgment. There is a good chance that the trend
will resume its upward climb.

4. Detachment.

Concentrate on the technical aspects rather than on the
money. If your trades are technically correct, the profits
will follow.

Stay emotionally detached from the market. Avoid being
caught up in the short-term excitement. Screen watching is a
telltale sign; if you continually check prices or stare at
charts for hours, it is a sign that you are unsure of your
strategy and are likely to suffer losses.

5. Focus

Focus on the longer periods and do not try to catch every
short-term fluctuation. The most profitable trades are in
catching the large trends.

6. Expect the unexpected.

Investing involves dealing with probabilities - not
certainties. No one can predict the market correctly every
time. Avoid gamblers` logic (e.g. I just lost so my next
trade must be a winner.)

7. Average up - not down.

If you increase your position when price goes against you,
you are likely to compound your losses. When price starts to
move, it`s likely to continue in that direction. Instead,
increase your exposure when the market proves you right and
moves in your favor.

8. Limit your losses.

Use stop-losses to protect your funds. When the stop-loss is
triggered, act immediately - do not hesitate.

The biggest mistake you can make is to hold on to falling
stocks, hoping for a recovery. Falling stocks have a habit
of declining way below what you expected them to.
Eventually, when forced to sell, you wipe out your capital.

Human nature, being what it is; most traders and investors
ignore these rules when they first start out. It can be an
expensive lesson. Control your emotions and avoid sweeping
along with the crowd.

Still continue to breach some of these rules even though have them learnt by heart now. May be the last stage of a trader's career i.e. learning to completely control emotions the longest and most difficult to master

in bull times....all rules r thrown 2 the air as no complaints....everyone happy....minting!

And then suddenly we have January the 22nd.!!!!!!!!!!!!!!!!

Perhaps the single most important book about trading ever written. this is also a very influential book for a lot of top hedge fund managers.

Dear Friends,
We all discuss and waste lot of time on trading rules, but what is result ?

The most important and basic rules of trading and investing are as follows:
1. Buy low, sell high.
2. Let profits run, cut losses quickly.
3. Add to a winning position, not a loser.
4. Go with the trend.
These rules look simple and are certainly easy to understand. So, how come so many of us kill ourselves in the market? What makes it so difÞcult to follow these guidelines?
More than likely we have repeatedly broken each of these rules and will probably continue to do so, despite acknowledging that we will wind up losers if these simple guidelines are not followed. How come? The answer to this question contains the secret for our future success in the market.
The problem lies not within the rules, but within ourselves as we apply these rules to our investments and trading decisions. Yes, the problem is internal, and until we learn to change our perception about what makes the market tick we will continue to punish ourselves and remain on the losing side of the ledger.

Every one knows this cardinal rules but what happens ?

All this virtues discussed in the book are very true.
But who have time to work on self to follow the same.
All we want is instant gratification ultimately end up as loser.