Dave uses very specific rules for all of his trading activity. He uses a checklist to make sure each trade meets his very strict criteria. No trade is taken unless it passes Dave’s stringent set of guidelines. He is a rules-based trader. Dave leaves nothing to chance.
Dave is a position trader. Each trade is held from a few days to as long as several weeks. He is a trend follower. Based on years of research, Dave has concluded that trend following offers the most consistent rate of return over the long run.
Without question, Dave’s main focus is “preservation of capital.” In order to become a successful trader, the most important focus should be money management. His entire trading strategy revolves around protecting his investment capital.
His trading approach involves the use of very tight protective stops. Dave gives each trade very little “wiggle room.” If the trade doesn’t show a profit within the first 24 hours, he cuts his losses very quickly and moves on to the next trade.
Based on Dave’s years of meticulous research, most winning trades will reveal themselves within the first 24 hours. In other words, if a trade is losing money at the end of one day, the trade will probably be a loser. It’s always a good idea to simply liquidate the trade and take a small loss. By following this simple rule, Dave has saved a tremendous amount of investment capital over the course of his 29-year trading career.
Dave is a big believer in “cut your losses and let your profits run.” Without question, this is the best way for traders to gain a small “edge” in the markets. Obtaining a small edge in the financial markets is the key to enjoying a successful trading career.