My Stock Market Playbook
The rules and principles that guide my market decisions.
The stock market is a hard and isolating game.
It’s even harder if you don’t have a set of principles, commandments, or rules to follow while trading and/or investing.
I’ve been getting some questions on my philosophical and ideological approach to markets, I figured I would put together a quick article outlining how I think about approaching the market.
Some of you will agree with some, none, or all of the my principles. Trading is very personal, but I wanted to share what has worked for me and provided me with success.
Cut losers faster and without hesitation. Capital preservation is a skill not a weakness.
Let winners run longer. The biggest money is made by sitting through discomfort in the right names, not by overtrading. Do hedge funds and big money managers day trade or make moves every single day, or hour? No.
Focus on leading themes and leading groups, not just isolated setups. Stocks move best when they are being pulled by a broader narrative or theme.
Avoid forcing things in weak tape. Cash is a position and patience is an edge.
Stop treating every setup as equal. Concentrate your biggest bets where conviction, theme, fundamentals, technicals, and structure all align.
Reduce noise intake. Fewer opinions, alerts, and opinions leads to a clearer mind and better execution.
Spend more time studying past winners and history. History leaves clues for what can happen in the future. Market cycles and patterns repeat themselves over and over again, the only changes are the tickers.
The strength and length of your watchlist tells you what you need to know about the market. Leading names will tell you a lot about underlying market participation vs. the broader indices.
If you have cushion, hold core positions through volatility when the thesis remains intact. Not every pullback is a sell signal.
Respect longer timeframes more. Weekly and monthly charts signal institutional behavior. These are my primary charts, I do not pay much attention to intraday price action.
Separate trading from investing more cleanly. I have two accounts, one where I put money to swing-position trade, and another to invest. Investments are investments, trades are trades. Different rules, different expectations, different risk management.
Avoid revenge trading after losses. One bad trade does not require immediate action.
Trust process over PnL. If you’re up 50% on a position in a leading stock, why get out if the trend is still in tact? I’d rather sell a winner slightly too late rather than far too early.
Less is more. LeFewer but higher quality trades outperform activity.
Focus on liquidity, ownership, and sponsorship. Big moves need big buyers.
Reevaluate your thesis regularly but do not overreact to headlines. Trends and thesis rarely break overnight.
Avoid trimming winners too early out of fear. Selling out of fear of giving back gains is often more expensive than actually losing gains.
Journal trades with brutal honesty. Patterns repeat if you don’t make an effort to change them.
Stay flexible. Strong views should be held lightly in fast moving markets. If you’re bearish one week but price action shifts, you should be able to adapt quickly.
Accept boredom as part of successful trading. Excitement is often a warning sign. The best trading is boring, dopamine is for gamblers.
Pay attention to when leaders stop acting like leaders. Character change matters.
Protect mental capital as much as financial capital. Fatigue leads to mistakes. If you need a break, take a break.
Think in probabilities, not certainties. Nothing is certain in markets, things that “should” happen don’t “have to” happen.
Be willing to do nothing when conditions are unclear. No trade is often the best trade and the hardest part of trading is the act of not trading.
Focus on execution quality over frequency. One well executed trade is worth more than ten mediocre ones.
Avoid adding size to losing positions. Losers average losers. Averaging down without confirmation is hope.
Let price confirm your thesis. If you have a strong thesis but price action says you’re wrong, all the matters is price. Being right fundamentally does not matter if price disagrees.
Pay attention to how stocks react to good and bad news. Reaction matters more than the headline itself.
Keep risk defined before entering the trade. If you do not know where you are wrong, you should not be in the trade.
Respect when the market environment changes. What works in one regime can fail badly in another.
Focus more on asymmetric opportunities. Limited downside with meaningful upside is the goal.
Do not fall in love with tickers. At the end of the day, we’re trading numbers and letters on a screen. Attachment clouds judgment.
Be aware of overconfidence after winning streaks. Winning can be just as dangerous as losing.
Study failed breakouts as closely as successful ones. Failure teaches discipline.
Stay humble. The market will always be bigger than any thesis, any trade, or any year.
Focus on capital deployment timing, not just idea generation. When you buy matters as much as what you buy. “I’m holding forever” doesn’t matter if you buy too high and don’t make money for years.
Avoid overtrading, but especially during strong trending periods. The best trends do not require constant action.
Recognize when you’re in a trading funk. If you don’t have it, you don’t have it. Take a step back.
Pay attention to volume. Strong trends are supported by broad involvement.
Retail can have an edge, don’t just write off “retail heavy” stocks. Palantir, Robinhood, Rocket Lab, etc. have been some of the biggest winners of the last few years.
Risk first, reward second. Focus on how much you can lose before focusing on how much you can win.
Accept that you’re going to miss tons of trades. That’s okay. you do not need to catch every single winner over the course of a year.
Focus on consistency over home runs. Always swinging for a home run is how you consistently strike out. Take singles and doubles. Not every trade needs to be a 300% win.
Take accountability. Your trades, investments, and execution are your trades, investments, and execution. Blaming others for your own actions is how you inevitably fail.
Focus more on the “why.” A stock with a meaningful catalyst gapping up 20% is more noteworthy than a random stock gapping up 20% for no notable reason.
Define success by adherence to your rules, not outcome. A small loss, not chasing an extended move, etc. can be categorized as a success.
Know your personal strengths and weaknesses as a trader. Some people are better at breakouts, some at pullbacks, some at longer term holds, some at buying weakness, some at buying strength. Lean into what actually works for you.
“Buying the dip” doesn’t mean buy to 0. Differentiate between buying a dip into support vs. a free fall. Buying a dip into reasonable valuation levels or technical levels is more meaningful than just buying blindly.
Don’t be afraid to re-enter a trade that stopped you out. Sometimes the idea is right but the timing is off. If you get stopped out, don’t write the idea off completely as long as the stock hasn’t completely broken apart.
Enjoy the journey. Trading and investing is a marathon, not a sprint. You want to trade for years, not days. You do not need to get rich tomorrow, or next week, or next month. Good decisions compound.
I hope this provides some clarity into my bigger picture market mindset and how I approach the markets.
It took a long time to get to a place where I actually followed and trusted these principles, but I’m now very comfortable with how I operate because of everything outlined above.
If even a few of these resonate and change how you approach the market then this list will have done its job.
I’ll be back on Sunday with the week ahead preview, there is a lot to discuss. I’m also considering a weekly, biweekly, or monthly chart focused post where I break down setups I’m watching and take subscriber chart requests. If that’s something you’d find useful, let me know.
Talk soon.
Excellent
Wow. I needed this