Commandment No. 9: Don't Trade Off Only the Headlines

In this special look at Jim Cramer's latest book, he points out the reason to resist the knee-jerk reaction.
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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 ninth 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

If I didn't know any better, I would think that headlines are written to pick off errant traders who don't know enough. Watch tonight, watch when

Intel

(INTC) - Get Report

reports. I guarantee you that whatever headline is written for the competing wire services, it won't tell you what to do. If anything, it will throw you off the scent.

That's because the headline writer's job is antithetical to the process of investing and trading. You trade when you have knowledge of outlook, but the outlook comes out

after

the raw number, which isn't enough to trade on.

That's why I always say (and why my ninth Commandment of Trading is):

Don't trade headlines.

Wait for the story. Believe me, you will rarely, if ever, make money if you do nothing but react to the headline.

How bad can it be? Consider

Apple

(AAPL) - Get Report

. I think that, looking back on the headlines after that company reported, you most definitely would have

taken

stock rather than sold it, because the headline was written with insufficient information.

Wait for the story. Don't trade the headline. Resist the quick trigger. You will do much better and generate far more winning trades this way.

Random musings:

Don't forget, I'll be signing copies of my new book,

Jim Cramer's Real Money

, at Borders bookstore this Thursday, April 21, at noon. I want to see you in downtown New York, at 100 Broadway -- right around the corner from Wall Street. Should be terrific!

At the time of publication, Cramer was long Intel.

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. 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."