You said "worst case, his cash gets tied up" - as in the position is actually an "unrealized" loss but he's still holding on for an eventual reversal. In my neck of the woods we call that "inability to admit when wrong."
Surely, looking back at stock index performance over.. Since the start actually, you could also refer to it as an investment
%% Sure can work well in some markets; IBD fouder made a fortune buy hi sell+ HIgher.......................................................................Many tried that with a single stock; + its like zebra'/ wilde beast cossing a river== crocs take it out / kill it, in a bloody red mess. Or as the UK hedge manager / Jack Schwager noted dont run out of bullets, because then the elephant [big trend ] comes by
The point I was trying to make is that markets continue operating on the basis of supply & demand, price reversals continuously take place at end of trends as well as within trends, you don't have to back a potential of trend reversal. If you aim to buy value within an uptrend all you doing is spotting when demand starts outstripping supply when a discount has been created. Of course you could buy breakouts, I prefer not to personally.
%% I see your points JSS; hi. Buying hi + selling higher can work real well- in an up trending bull market,as long as one is not too many year$ late LOL. IBD founder risks $3-8 for $24.....; in the context of a 250-450 page/book system.He rode some trends[ buy hi] for years + made more than $24 LOL Bought a NYSE seat + started IBD...... off his profits.
They trade. Just kidding. Seriously, many folks have no business trading, especially day trading. I know, I was one and fortunately quit day trading early. Swing trade was easier. By the way what really is risk management? I am still trying to figure that out. Regards,