ZF Capital

Do not plunge or become overextended. This is worn-out advice, I know, but margin and capital worries warp your judgment and hamper your trading skill. When you think you have become familiar with technical action and can interpret market movements– and can take losses quickly!– not until then should you speculate with larger lines of stocks. There is no disgrace in being a small trader, and the market will remain open for business for a good many years to come.

– Humphrey Neill, Tape Reading and Market Tactics

Perhaps desire to squeeze the last point out of a trade is the most difficult to fight against. It is also the most dangerous. How often has it happened in your own case that you have entered a commitment with a conservatively set goal which your judgment has told you was reasonable, only to throw over your resolutions when your stock has reached that point, because you thought, “there were four more points in the move?” The irony of it is that seemingly nine times out of ten (I know, for it has happened with me) the stock does not reach your hoped-for objective; then– to add humiliation to lost profits– it goes against you for another number of points; and, like as not, you end up with no profit at all, or a loss.

– Humphrey Neill, Tape Reading and Market Tactics

In the last analysis, it may be stated that charts are aids, to be used by the intelligent trader or investor, along with many other important means, as guides to market sentiment.

On the other hand, charts are full of dynamite and can cause crushing losses, if blindly followed by the inexperienced who do not realize that, inasmuch as human nature is not constant, there can be no system which is infallible.

Mechanical forecasting will never take the place of intelligent judgment.

– Humphrey Neill, The Art of Contrary Thinking

Have no public opinions of your own, when asked; and ask for none. If you get into the habit of giving opinions you are inviting an argument at once. You may talk yourself out of a decision which was correct; you will become wishy-washy in your conclusions, because you will be afraid of giving an opinion which may turn out wrong. Soon you will be straddling the fence in your own mind; and you cannot make money in trading unless you can come to a decision.

– Humphrey Neill, Tape Reading & Market Tactics

Trade with the trend, not against it. This so fundamental it scarcely needs discussion. But as soon as you think the trend has turned, sell quickly. Hundreds of losses have been incurred because it was hoped that the trend had not reversed.

– Humphrey Neill, Tape Reading and Market Tactics