Trading involves risk. Always be careful. Paper trade before real money. Watch a setup a few times before you trade it.

Trade small size. You can make a living even with 100 shares. Never double up or down on a losing position unless the setup allows it. They can't kill you with 100 shares.

Be relaxed with stops. Or you're likely to get stopped out often right at the end of the moves. They can't kill you with 100 shares.

Be patient with winning trades. Visualize a price target and just forget about the toad. If you get frustrated by the ups and downs to take small profits, you'll never catch the big prize.

Don't envy the moves. AAPL just went up $2 without you and that's fine. It could've dropped $2. To jump into trades not in a good setup will often turn you a winner one day, a loser next. Once in a while, the market tide will reverse and you might end up holding the bag.

Don't read other people's opinion or predictions. They're often wrong, fundamental or technical, famous or unknown, bald or covered. And you could end up paying for it. Just stay away. Actually run away. Nobody knows the future.

I've read lots of newsletters and tons of blogs and boatloads of predictions. Trust me: nobody knows the future.

Never sell in a panic. Never buy in a froth. Never catch a falling knife. Never short a break-out. Never yell at the market. Never ask God to bail you out.

You could get cleaned out by drug stocks, or small oil and gas stocks, long or short.

If you don't know where you're going, you'll probably end up somewhere else.

Mr. Toad, June 2008