so my question would be, how is that unique? Many people can recognize patterns. Bull flags, bear flags, high tight flags, very common. By that definition, I could say my edge is finding stocks in an uptrend and buying them when they pull back to the 10 day (or whatever) moving averages. Or buying stocks on a breakout. Or buying stocks breaking out of a cup with handle base. Are those considered an edge? If not then how is recognizing patterns different. If so, then I can define my edge. serious questions, not debating this is how I learn
simply the way I was taught. You make good points. I suppose I’m doing it in steps. In the past I was always a buy and hold guy. I held for the most part through 2008-2009. Yes I lightened up, from about 80% equity to 65% equity. It all worked out. But yeah it could have worked out better had I not waited as long as I did to get back in. now I’m 33% equity up from 25%. That was a big step for me, and it paid off. I think I know a lot more now than I did back in 2009. (Ironic since I was a Financial Advisor back then ). So we’ll see if I get back in at the right time. I’m buying in drips and drabs to get back in slowly, because I know I can’t pick the bottom or even discern with a degree of certainty that the market has proven itself and it’s time. at some point maybe I’ll be comfortable going to zero or 100% equity. I better hurry, I’m 71, soon my brain won’t be working well at all LOL. That’s one of the reasons I’m trading in the first place, to keep my brain working(plus I enjoy learning)
Being unique means it works specifically for you only. In the example of pattern recognition everyone uses the specific pattern(s) that one can consistently make money, i.e., a high probability of positive outcomes. The pattern(s) can be quite different, however. You have your pattern as described in your post. I have a different one. The question is whether the perceived pattern is real or not. With good discipline and a proper trading process a real edge will result in consistently positive outcomes. That’s the only criteria. Again, the time period of the consistently positive outcomes is another key question altogether. In addition, edge does change with the market conditions and time as well.
Thanks good clarification. So I think in this new trading account I set up for now I leave the cash as it is my paper trade for a while if it works I’ve got my edge of it doesn’t , back to the drawing board
Ah! Therein lies the problem. Could it be that whoever taught you didn't have your best interest a heart? The market is not there for you to make money , but for those who control the market to make money. As a financial advisor if a client came to you and asked for a portfolio that outperformed the S&P and didn't lose money, what is your response?
that’s easy. My response would be that’s not what I do I’ll help you set up a financial plan we will invest long-term and ride the ups and downs get you to a level of equity exposure that you’re comfortable with in both of Marcus and down. And you’ll get the return at the market gives you in line with the level of risk u r willing to take. 95% of my clients were good with that. The other 5% I fired as far as the people who taught me not having my best interest at heart, in a sense that is exactly the case. I was taught in training not to spend time trading or trying to time the market. And the reason for that was, now that I look back, to free up as much of my time as possible to go out and bring in new assets. That we got paid and that’s how the firm made money so that’s how they taught me What’s the top business 90% of people fail in the first five years, probably similar to trading But I feel like I’m getting past that bullshit now
That's exactly the response I'd expect from a financial advisor. The problem is that most don't know what they're comfortable with until it's too late. When I finally got round to writing my own financial plan, I was very specific as to risk management, portfolio allocation & process. For example I will not hold losing positions in my portfolio. I will not hold a position that has a weekly close below the30 wk ma. (A couple of the rules that have kept my drawdowns to a minimum) Cash is a position!!. The is little downside to holding cash! Your response is conventional wisdom so to speak. Have a well diversified portfolio and invest for the long term. Ride the roller coaster. Follow the crowd. We'll all end up in the same place but there's safety in numbers. To end up different from the crowd you have to do different than the crowd. I guess you could say I'm comfortable holding equity when it is moving in my direction and comfortable being in cash when equities are trending downward. Not sure about what business fails, my wild guess would be restaurants. Why is that relevant?
We are not disagreeing infected agree with everything you say. My views have changed immensely since I left the business. re the business failing, lol I was using voice recognition and failed to check it. What I meant to say was that’s why 90% of people in the financial advising business fail within 5 years. They don’t bring in enough assets, because they are busy actively managing money. The ones that are successful are the ones who bring in money, put it in a set it and forget it portfolio, charge an annual fee, and move on to find the next prospect with 7 figures. That’s what I did and that’s why the last few years I was working 4 days a week 2-3 hours a day (at that point I had stopped prospecting) and making serious money. sad but true. anyway, I’m done with that now, just trying to learn to better manage my own money. As I said, we are on the same page, I agree with your points
All I can recommend is to keep it simple. Write stuff down. Ask yourself why you are doing whatever it is you are doing and if it is the simplest way to get to where you want to be. Question conventional wisdom. Be specific; define to a measurable amount things like "comfortable", "risk" and "Long term". Your biggest problem is probably looking back at you from the mirror. That's my case for sure. The desire to do something when there is nothing to do.
thanks DD. And yup, for sure my biggest problem is me.FOMO as well as what you mentioned, the desire to do something just to do something. not giving up.