|PowerShares QQQ Trust (QQQQ)|
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- Wait for the Market Volatility Index (VIX) to drop below 40 and stay there for a week. Massive price swings require equally massive stop losses, which rarely justify the intended positions. Your only alternative is to stand aside and do nothing, no matter how much it hurts to watch others playing those big rallies and selloffs.
- Forget overnight positions until the index futures stop gapping 2% or more every morning. These price jolts are great news when you're on the right side of the trade, but total devastation if you're on the wrong side. And guess what? You're not smart enough to predict overnight direction from day to day. Neither am I.
- End your love affair with popular stocks that made you money during the last bull market. In November 2008, these are the issues that will trigger the most painful and unexpected reversals, which happen right after you're absolutely convinced your position is the right play. The bottom line: They see you coming, sucker.
- Get control of the time element in your market strategy. You're getting killed because you have no patience and forgot how to sit on your hands when your trading edge isn't in play. Realistically, it could be months before the market works for you again. Would you rather wait it out and survive, or stay busy and get crushed?
Know What You Own: Farley mentioned brokerages. These include Charles Schwab (SCHW), TD Ameritrade (AMTD), E-Trade (ETFC), Merrill Lynch (MER), TradeStation (TRAD), Nomura Holdings (NMR) and SEI Investments (SEIC).