New trader. Is my strategy ridiculous?

Discussion in 'Trading' started by slouse, Jul 2, 2010.

  1. slouse

    slouse

    I am 26, make $250k a year, have $500k in my trading account.

    I pick solid stocks that move with commodity prices. My main trading stock is CNQ. Huge cash machine and top management.

    I only hold one stock at a time. I buy at what I think is a good price, start with $50,000. If the stock goes down I keep buying all the way down. Sometimes I end up with $400,000 of the stock. When it goes up a couple percent and I'm at a $10k profit I sell.

    I made over $50,000 in June.

    My whole concept is that I'm young, I make a lot of money, and if I take a big hit or get wiped out I don't really care. I have time to recover.

    I want to get rich. Am I too risky and stupid? Setting myself up for failure?
     
  2. 1) Should I divide those numbers by 10?
    2) Your "strategy" is a form of Russian Roulette. You can earn a lot of money on many trades but give it all back, and more, on just one trade.
    3) Your strategy would tend to work in a sideways to uptrending market. You can be destroyed in a sustained bear market.
    4) You should want to go from "rags to riches", not rags-to-riches-and-back-to-rags.
    5) If you lose your job in a bear market, you will have a difficult time recovering.
    6) Good company fundamentals is no guarantee that a stock price can go lower than you expect. :cool:
     
  3. Strategies are never stupid. Only people.
     
  4. Only do that on ETF's so you avoid bankruptcy risk.
     
  5. heech

    heech

    You'd have equal success (and a lot more fun) doing the same thing at the blackjack table in Vegas.

    Play $1k hands. Every time you lose, double down. As soon as you win even once, you'll be up $1k (overall). You'll only be wiped out if you happen to lose 8-9 hands consecutively, which is statistically speaking a rare event. Most nights you'll walk away up $20-$40k.

    And in the mean time, you'll be in the high-roller suite, be bombarded with free drinks, and have girls hanging all over you. A lot more entertaining than dealing with customer service at IB.
     
  6. So the strategy is to limit your profit and let the losses run?
     
  7. I always told my clients (when I was a broker) to average up not down the math doesn't work on the way down. You can make money like that, however an accounting problem or the like will pretty much wipe out the account. It is a matter of time till it blows up. Not trying to be an ass but it's the worst strat i've read.
    Your in a really great spot, young great income, money in the bank, use a well documented strat, and maybe write calls on it, you will KEEP your money growing. good luck
     
  8. lol thts awesome
     
  9. bespoke

    bespoke

    it's a strategy that works great, until the one time it doesn't
     
  10. Two words...table limits. They won't let you bet endlessly until you win. At 1K per hand you'd be over most table limits with 4-5 losers in a row, and believe me, that ain't unusual. Now at a ten dollar betting level you may play for awhile, until they spot your style. They'll close the table on you. Move to another table and you'll be asked to leave. Martingale system has sent many a man to the poor house.
    http://en.wikipedia.org/wiki/Table_limit
     
    #10     Jul 2, 2010