Try using that same strategy at the craps table. Say for instance that you always bet on the PASS and would always take full odds available. Now say that you end up losing as everyone does. If you then use the idea that IF you had bet on the DONT PASS on every single bet you made instead of the PASS, you might think you would have made money right? Note: for anyone who does not understand how to play craps, a quick explanation is that when you bet the PASS you are hoping the shooter will win and if you bet the DONT PASS, you want the shooter to lose. Note 2: For those that really want to know how craps works, on the come out roll, if you are betting on the PASS, if the shooter rolls a 7 or 11 you win, a 2,3, 12 you lose. If you are betting the DONT PASS, a roll of 7 or 11 you lose, a 2 or 3 you win, and a 12 is a push. After the point is established, if the shooter rolls his point, a PASS line bet wins and a DONT PASS loses. The house advantage is simply that the 12 is a push. The guy's strategy of switching tracks and I assume going long on the stocks you were shorting and vice versa. This may work if you are using a specific method to go long or short a stock. As everyone else has alluded to, your head may play games on you. If you would normally look at a stock and say for example "this stock is a great value at this price, I am buying it." Your gut feeling about stocks may actually be right. It might simply be your timing that is off. To give you an example of what I am talking about. I recently went long on ALO (May 6th, I believe). I had bought it @ 11.60 (the absolute worst price to get for the stock that day). It proceeded to go down to 10.70. I cut my losses at 10.85 (stupid me!). The stock is now trading at 12. If I had shorted the stock at 11.60, yes I would have enjoyed a nice (short term )ride down, but that is only part of the puzzle. When should I have covered? If I had kept my long position open, I would be a winner right now. If I had shorted it, I would have said to myself, wow, I guess doing the opposite is a great thing to do after all. But, now I would be cursing the short position. I think this example clearly shows that its not hitting the exact highs and lows of every stock, but overall making the correct decisions. I have found that dollar cost averaging has been the most effective trading tool ever conceived and used. As far as having stop losses in place, I think they can help, but I would not have made the money in the market I have if I kept cutting my losses on long positions. I tend to buy stocks I consider extremely undervalued with risk/return ratios that are very attractive. Two of my biggest winners I ever had were MXT and ACF. I had strated buying ACF at $3/share and kept buying it all the way down to 1.55. I was buying 5000 share blocks below $2/share. ACF is now well over $20/share. If I had cut my losses on it and sold off when it went below $2, I would never have made the money I did on it. Same with MXT. take a look at those stock charts the past 2 1/2 years. March 19,2003, I made $35,100 on MXT. It was the #1 stock gainer of the day. I had been buying it when no one else wanted it. TSO is another example. It doesnt always work as my TWRAQ will show, but I still like my batting averages.
Wow.... I don't know where to start with this one. Based on my experience, an existing strategy is normally based on observation and a semi-sound logic. The problem is that an inexperienced trader will compromise the plan by holding on to losses too long and taking quick winners or he is too impatient to execute at the right price. Reversing the plan itself will produce faster negative results (I would like to see someone sell short into today's trend and write back here with a success story). The problem is most often not the plan itself, but the execution. This is why anyone who knows anything about trading will tell you that it is not the plan; it is the operator of that plan.
true enough. Like they say, buy low and sell high. Sounds easy enough. Best plan I ever heard. For the life of me though, I can't quite figure out what is a low price and what is a high price! I can sure tell if a price is lower or higher than what is was in the past, but I'll be darned if I can figure out where it will be headed next hour, next day, next week! I guess my buy of FDS @ 30.50 was just a lucky ass bet today! But, stupid me. I sold it @ 31.03!! DAL looks interesting. I had bought AMR @ 2.11 a couple years ago. Maybe DAL will do the same as AMR and head back up over 10. who knows.
Is it losing or loosing? It distresses me that I have seen this word, a fine english word with some real history behind it, misspelled. I give up, no more PM's to the misspellers. I just cannot change the world.
This idea will not help me. I have a strategy that breaks even every year but the opportunity costs are where the losses really come in. If I reverse it, nothing will be better.
Always Bingo, Correcto mundo, Opposite George wouldn't work But it does work with the NFL. Study your heart out and find your easy best pick and go the other way. It's hard but does work. I like to use the Boston Globe sports writers and when they all agree against a spread , I go the other way. You look real stupid when you loose or is that lose???but it works and you always get great value.
LOL... So... let's say you can't pick up woman, it doesn't make you go out looking for men.... You just can't do the opposite, but you can change actions / eliminating negatives( mistakes ), like "Getting too wasted", "Being touchy", "Not smiling", "Shouting", and etc. etc. Who's actually stupid enough to do the OPPOSITE...
Reminds me of a story I tell once in a while about my friend, a golfer. He would get up on the tee box, line up so that he was aimed way left, toward the trees along the left side of the fairway. The reason was he had a wicked slice. So then we would swing, the ball would head straight for the trees, then at the last minute would slice wickedly to the right and land in the fairway. I watched him do this hole after hole. Aim way left, slice it into the fairway. Finally we reach a hole he goes through the same motions, lines up aimed at the trees. He swings...hits the ball...it heads toward the trees. Only instead of slicing to the right at the last moment, it continues to go straight into the trees. My friend yells out a variety of cuss words, and throws his club on the ground. What was really funny was that he had just hit the perfectly straight shot! The problem was he was lined up wrong! It's a hell of a thing to be mad because you just hit the perfect shot! Anyway, a better solution for my friend would have been to work on the problems that caused the slice...rather than to play for it. And that's how I would look at trading. If you start fading yourself, the chances are you would do it about the time the method started working. Now you would have hopelessly confused yourself. Work on the elements of your trading that are creating a problem. OldTrader
"Buy low, sell high" isn't a plan, it's a goal. For that matter, so is "buy high, sell higher". Both directly translate to profits. The trick is figuring out how best to achieve them. "Buy strength, sell weakness" (trend following) is a plan. It's not a perfect plan but it beats trying to predict tops and bottoms.