Commandment No. 10: Don't Trade Flow

Editor's note: Jim Cramer's new book,

Real Money: Sane Investing in an Insane World

, is available in selected bookstores now. As a special bonus to

RealMoney

readers, we will be running Cramer's "Ten Commandments of Trading." For more about the new book and to order it, click here. To learn his "Twenty-Five Rules of Investing," click here. Today, we present Cramer's tenth trading commandment. Read more about his trading commandments:

Keep It a Trade First Loss Is Best Take Your Losses Trading Gains, Not Investment Losses Tips Are for Waiters No Sale? No Profit Control Your Losses Don't Fear That You'll Miss Anything Don't Trade Headlines

Watching the tape is a loser's game, unless you remember that there are sellers as well as buyers at work. I point this out because I really and truly think that most people see "takes," or buys of stocks, and they want to go take those stocks themselves.

Wrong!

Trading flow, trading off of takes or hits, is dicey for even a seasoned professional. Most of the time when you see flurries of buying, it's

Wrong!

That's the reason my tenth trading commandment is:

Don't trade flow.

Recently, I saw takes of

Morgan Stanley

(MWD)

all the way up to $60 off of news of some defections. The stock just snowballed as the "crowd," which is almost always wrong, figured something big was going to happen.

It sure did. The big happening was that you caught a couple of downgrades as the Street recognized that real revenue producers were abandoning the stock in droves.

Lots of times, the tape reveals sucker plays. Lots of times, people just take because emotionally it feels right. If I were you, I would turn off the ticker. Unless you are a junkie like me and just like to see the ebbs and flows, it really is a meaningless exercise at best and a losing one at worst.

Don't be sucked in.

Random musings:

This concludes my second installment of takeaways from my new book,

Jim Cramer's Real Money: Sane Investing in an Insane World

. To get more, you have to buy it! I can make it fun for you. Come to Borders bookstore in downtown Manhattan, 100 Broadway, tomorrow (Thursday, April 21) at noon and get a signed copy! I'll be dishing them out left and right!

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS by

clicking here. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to

jjcletters@thestreet.com. Listen to Cramer's RealMoney Radio show on your computer; just click

here. Watch Cramer on "Mad Money" at 6 p.m. ET weeknights on CNBC. Click

here to order Cramer's latest book, "Real Money: Sane Investing in an Insane World," click

here to get his second book, "You Got Screwed!" and click

here to order Cramer's autobiography, "Confessions of a Street Addict."