Bromides that are pure BS

Discussion in 'Psychology' started by stock777, Nov 13, 2006.

  1. 1) Never add to a loser

    2) Only trade what you see, never have an opinion (don't 'fight' the market)


    Feel free to add your own, there are many.
     
  2. lol, when This gets to 1000 views and no responses I will declare total and unconditional victory.

    This is only a test.
     
  3. the very fact that u trade means that u have an opinion.
     
  4. (3)Love your losers
     
  5. "The trend is your friend"

    "Losers average losers"

    "Buying options is a fast way to the poorhouse"

    "Don't try to pick tops or bottoms"

    "Psychology and money management are more important than predicting market direction"

    "Never trade with money you can't afford to lose"

    "The market is always right"
     
  6. "Trading without stops guarantees disaster"

    "Technical Analysis is worthless"

    "Your largest drawdown is always in the future"

    "Always trade in the direction of the long term trend"

    "Buy and hold stocks is the optimum strategy for an investor with a >30 year horizon"
     
  7. <center>Cut your losses short




    Let your profits run




    Set your stop and target and walk away

    Risk no more than 2% per trade

    The majority is always wrong

    KISS

    [​IMG]
    </center>
     
  8. On this common adage, if your entry point is so bad that you can't wait until your entry becomes a winner before you add, it's probably a good idea not to want to add to that position, no?

    It's the reasoning behind these "cliches" that's important, not the individual results that one can achieve by breaking them. Lots of people bend over backwards never to "take" a loss, when simply exiting and going for an improved re-entry would yield far better overall results.

    If you could simply average your way out of a loss, what would be the incentive then to improve your entry timing on future trades? That is the actual wisdom behind those words I think.
     
  9. Yes, in most cases exiting and then reentering is preferred.

    However, that, like many of the bromides here is easier said than done.

    I refer to the notion that once you are in a trade that has gone against you, that it's sacrilege to add to the position at some later point.

    This is a toxic premise. Each trade is a separate event, standing alone, within the confines of a total risk management scheme. You would not want to add endlessly to the same trade so that your account was at risk.
     
  10. Nattdog

    Nattdog

    in my opinion, any strategy that advocates tight stops as a way to control risk without taking into account transaction costs, opportunity costs, and forward expectation... so basically all strategies that advocate this.
     
    #10     Nov 14, 2006