Andrew Keene's Trading Rules

Top 10 Trading Rules:

1. Always trade with the trend; get long strong stocks & short weak stocks.
2. Always follow your own plan and never veer from it.
3. Never take trades or ideas from others; as Cramer says, “tips are for waiters”.
4. Do not over-trade; commissions can kill your P & L.
5. Don’t be afraid to be ‘flat’ if news or market is uncertain.
6. Don’t be an emotional trader; if you have been in a fight, are hungover, or are extremely tired, DO NOT TRADE!
7. Do keep a journal of trades that have been a. Profitable, b. Unprofitable and, c. Commission Killers.
8. Never add to a losing trade.
9. Always know the levels where you will take your profits or trash a trade.
10. Always know your max loss or gain for any given trade; risk vs reward.

Top 10 Trading Rules for Equity Options

1. Never sell an option naked; always have protection somewhere.
2. Don’t trade merger or acquisition deals.
3. Don’t trade against trend, if so make positions small & tight. Trade risk $0.80 to make $1 but the other way is fine.
4. Always use previous highs, lows, resistance, and support levels to find levels to get long/short.
5. Never have positions so big that you can’t sleep at night. Traders need sleep!
6. Sell weak stocks on strength and buy strong stocks on weakness.
7. Never risk more than 3% of your total capital on any single position.
8. Never be one-sided, too long, too short, long too much premium, or short too much premium.
9. Never lose more than 2% of your total portfolio in one day.
10. Always define risk vs. reward levels. Exit on profitable/unprofitable trades.

Top 10 Reasons to Trade Equity Options

1. Hedge a stock position (buy puts for protection, sell calls to create dividend yield)
2. Be your own boss (make money from comfort of own home)
3. Make your own schedule (choose hours, vacation time, when to work)
4. Massive leverage (Make huge profits in small movements in options and stocks)
5. Tons of cash to be made (Make more money in an hour, day, or year than most people will make in their lifetime)
6. Limiting Risk (Less gap risk and can always limit risk)
7. See results (Unlike other jobs actually see results and performance)
8. Reward uncapped (Risk a little to make a lot)
9. Make money in any market condition (Different option strategy can be profitable in any stock direction or lack of direction)
10. Low margin (Trade a big position on little amount of cash)

Top 10 Pitfalls of Options Trading

1.Always define risk vs reward
2.Follow BIG Money (Be on the trades with big money and watch profits grow)
3.Cover cheap options (If sell an option for $1 and goes to $.05 just cover it and move on)
4.Don’t sell naked options (no protection means blow-out risk)
5.Sometimes the best trade is no trade 
6.Never add to a losing trade
7.Countertrend Trading is Dangerous (If trading against the trend, trade smaller or smaller stops)
8.Premium kills (Owning too much premium, every day will cost money with no stock movement)
9.The TV Bandwagon (Never take a trade based on a TV anaylst)
10.Every trade is different (Some require more time, more movement, and more risk)

Top 10 Rules for Trading Psychology

1.Never add to a losing trade
2.Stay positive and confident
3.Past performance is not indicative of future results
4.Don’t ever get too emotional of a trade
5.Don’t blame others, only you control your trading account and P&L
6.Your only as good as your last trade
7.Never risk money you can’t afford to lose
8.Accepting a loser is the hardest part, but you will live to see another day.
9.Cut losses and add to winners
10.Always have a Gameplan and never vere from it.

Top 10 Ways I Became Profitable

1.Patience is a virtue, waiting for the right trade is just fine
2.Define risk vs reward, never risk money can’t afford to lose
     a.What am I willing to risk on this trade?
     b.Where is profit level  #1 #2 and #3
     c.If stock or option moves against me, where will I punt this trade.
3.Never add to a loser, I will never add to losing trade unless it is part of the Plan.
4.Don’t overtrade, it’s a commission buster. Trading is not cheap
5.Don’t get emotional, Not every trade will be a winner; moving on is important.
6.Stick with a winner. Always stick with the trend and if trading countertrend, trade smaller.
7.Technical levels work; moving averages, support, resistance are great indicators.
8.Caution during earnings, company announcements, and expiration.
9.Bet bigger when winner, smaller when losing. Scale back if not trading well.
10.Never play the: would have, could have, should have game. The trade is over, move on.