Hi guys, I have been a long time member and trader but post very seldom here. But well, it's weekend, so not start a thread for a change? If you want to participate in this thread, you should have at least a few years of real money trading under the hood and preferably made a net profit over your career. Of course, there is no way to prevent others from posting but keep in mind that this thread will be most useful if the people posting have at least a slight clue what they are talking about. So, let's make a collection of the most stupid trading advice ever. Okay, now the first one. This is one of my all time favorites: 'You should only use this strategy in a trending market' or 'You should only use this strategy in a range bound market' What the fucking... while it sounds somehow quite logical, this is stupid beyond belief. One the foremost problems in directional trading is that it's extremely hard to know when a market will trend and when it will be range bound BEFOREHAND. Yes, one can easily identify a trend or range bound market, even by eyeballing the chart. Problem is, as the more experienced one of us know, the market will change its behavior on the turn of a dime. A method to identify the increased likelihood that a market WILL (NOT has) trend or the increased likelihood that it will be range bound IS actually the most important part of a directional strategy. A strategy without such a method actually is no strategy at all, it's simply gambling. And if one has such a method, the rest of the strategy is a piece of cake. If I can predict that the market will trend for some time, I will simply enter in direction of of the trend. If i can predict that the market will be range bound for some time, I will simply fade the market at the extremes. Newbies, if someone is handing you a 'strategy' accompanied by this advice, it's not actually a strategy at all. It's like the icing on a cake without the cake.
Call me Philosophical...but I don't think there is necessarily such a thing as bad advice. or good advice likewise, for that matter. It's more of a matter of how one Digests it ...and interprets it and uses it for the greater purpose of one's self. (i hope i don't sound like crap )
What about "increase your position as the market goes in your favour", what the f#ck! So that means buy at an even worse price
"An open loss is not a loss, only when you close the position the loss becomes real." My next question was: should I then never close a losing trade so that I prevent losing money? Then followed a complete silence.
Or buy more, turn it into a martingale, you can retire from trading sooner then, poor ofcourse! Never got the increase as it goes, yeah that's errmm smart.
Yeah, but what is better Holding a much larger position with a positive mark or a much larger position with a negative mark ?
By far the most moronic thing I probably have ever heard. There is no way that quote can be topped in The Stupid Contest. Nope. No way.
The whole point of adding to winners is simply to let your positive equity from the original position buffer the risk of the new one. It requires that one believes in continuation - otherwise one wouldn't add in the first place. Been discussed a million times already and I don't exactly see how its bad advice. Same thing with scaling in as price goes against you (taking some heat) when starting off with a smaller position (NOT doubling down). It means you believe in an upcoming reversal. That being said the latter is probably more difficult to predict than the continuation.