Discussion in 'Psychology' started by a529612, May 9, 2006.
Do you agree or it has more to do with luck?
Mr Stanley Druckenmiller also mentioned, in this precise order;
more to do with capital preservation [reasonable size,
takes time,work.....] Not luck.
Of course I agree! He's right in so many ways.
Its not luck per se (of course theres an element of luck associated with it though), IMO it has a lot to do with the probability of having a winner grow larger and your internal belief system.
Say you take a position and it immediately moves in your favor, well a good trader will hold it as long as possible (never sell a winner). A poor trader will sell it because of the fear of having profits taken away. A great trader, like Druckenmiller/Soros will LOAD THE BOAT if the conditions are just right. That takes courage and when it works, it makes a lot of money. If you have conviction in what you believe then go for it! That's the basis behind that statement. It takes courage to stand financially committed behind your beliefs.
The guy is legendary. Anyone who knows what he did with Qualcomm during Quantum's turnaround in 1998 understands what a great trader Druckenmiller really is.
What happened to the Quantum Fund
and what are the results since ?
quantum fund is closed last i heard. without doing the research, i think it has about 26%yoy returns since inception..something of that sort.
Your absolute statements about "traders"...
Actually apply more to "porfolio managers" putting on medium term positions.
When one is scalping or market making...
Taking a quick profit is FAR more optimal than waiting out a larger profit.
Why? Let's compare the 2 styles.
XYZ is "undervalued" by $0.50... and roundtrip cost is $0.007/share.
(1) Flip 1,000 shares for $0.06 in 10 minutes... profit = 60 - 7 = ** $53 **
(2) Hold 1,000 shares for 3 weeks for $0.40 appreciation... profit = $400 - 7 = ** $393 **
So how can #1 be better?
Because in the 3 weeks that XYZ reverts to fair value...
A good trader will do that 10 minute flip at least once/day...
Which is 15 flips x $53 = $795...
Less maybe $200 in losses from failed flips...
Still leaving 50% greater profit than buy and wait strategy.
Also, very importantly... the scalping strategy has:
(1) Far less risk.
(2) Near zero interst costs.
Please, everybody, STOP making erroneous, absolute statements like:
"Buy and hold is better than taking a quick profit."
This forum is full of such baloney.
Traders trade... if you wanna invest... please go elsewhere.
One could learn how to play high level poker at 2+2 Forums...
Because it's owned by Sklansky and moderated by poker experts.
But I don't believe a newbie could learn how to trade at ET...
Because he/she would have no way of screening out the "nice sounding" bullsh*t.
This is a place...
Where separating fact from fiction actually hurts the business model.
HoundDog, there's so much noise in your post I don't even know where to start.
Who said anything about scalping versus position trading? The theme of this thread is PHYSCHOLOGICAL. Did you catch that? I don't think you did...
Rather than call BS on the content of this forum (which I don't necessarily disagree with BTW), please do two things first:
1. Stick to the subject.
2. Think about your response BEFORE you make it.
Separate names with a comma.