Seek the Truth! Meaning that you must not blame outsiders for your losses. The truth of the problem must lay internally, not externally. So this is a good news since it's more probable to modify the inside source than the outside source. 1. Acknowledge it 2. Find out how you can overcome that problem 3. Find out the appropriate strategy that work for you
The book, "The New Market Wizards", which contains interviews with top traders, made a LOT of difference to me. And it's a very entertaining read. See if your local library has it, and check it out.
pumpanddumper: it sounds as if you've been listening to Phil Grande. Does anyone else here enjoy his antics besides me? I think he has some valid points.
Depends, do you want to trade fundamentaly or do you want to trade technically? But I believe most funny traders also pay attention to a chart at some point. A chart is about the only way you can see a trend. It can be defined by a number of different methods - Higher higs and higher lows indicate moving up. Any type of moving average can also indicate the direction of a trend. Trading with the market (in the direction of the trend) will usually generate the best returns. Make 'em pretty, Chris
I never heard of him but looked him up....yeah sounds like me. WELCOME What blows my mind about people in the stock market is, this is the only business that a sales person, sold you a stock for $70 and calls you and tells you it's only worth $55 and your happy. Then you buy more. That would be like the guy who sold you a car for $45k, and on the same day, he calls you and tells you it's now worth $25k, and your not only happy but buy another one! Every day I thank God that I can do something I enjoy. I love to teach. I was the youngest person ever to be certified as a professional ski instructor. I also at one time taught students how to fly helicopters. Now, the biggest challenge of my life is to teach people, how not to lose money in the market. It's tough to do. Wall Street for years has 'brain washed' the most brilliant of people. People really want to believe, that they can give money to a stranger, and these people will really care about their well being. It amazes me when I talk to people I meet, who do not know me as a radio personality, and we talk about the market. They can give you all the reasons why a stock went down, like that of IBM, what went wrong with the company and what it does. With all the knowledge of fundamentals of IBM, you would think they would have made millions, but instead they lost a bundle. What is funny is that they use the knowledge to justify the loss. That is dumb money, pure and simple. Why is it they don't say to themselves, knowing all the fundamentals, how the hell could I be losing? Isnât there a better way? But no, they wait for the company to develop another product in hopes they will get the money back they lost. I explain, that fundamentals are crap and noise. Why not go to where the truth is, THE CHARTS. Think of it like this, a family member is in a car wreck, you go to the hospital and the doctor took a series of X-rays. The doctor tells you the prognosis of the victim. How many times, instead of taking his word, you wish you had the knowledge to read the X-ray charts yourself, so you really knew! Companies are ill and you're listening to a sales person, to tell you what is wrong. Why donât you learn how to read the charts, like the X-ray and you be the doctor. Then you can prescribe, the medicine that will cure your sick stock account. I just want to know, what direction the market is headed, or the individual stock. I could care less what the company does. I also want to make money, when a company falls, as well as when it's going up. I want to know if the margin, the cash flow, and the earnings momentum, are better each month. The chart provides that information, not CNBC talkies or a guest. The following questions keep me awake at night! Why do people not use a stop? Why is it when a stock goes from $20-$100 then stops going up they don't ask why? Why is that as soon as a stock breaks the 200 day moving average the stock will fall like a rock and people never place a stop under the 200 day moving average? Why is it people think just because a stock is a stock it's going to go up? Why is it people will say stupid things like, "it can't go any lower or it's a good company", when they never sat at a board of directors meeting or sat with the companies CFO? Why is it that parents tell children not to trust anyone but it's the parent that gives thousands of dollars to strangers? I just hope each day I can change some person who is dumb money to smart money. Then I hope they show appreciation by sending a donation to the American Cancer Society for Boggy Creek camp to help kids with cancer. Phil
Money management is as equally important as selecting the right stock to buy or short. You can win 80% of your trades and "go broke" with improper money management. 10 Trade (Stock) Example of Poor Money Management: (assuming equal dollars invested into each stock trade) eight 2% winners = 16% Profit two -40% losers = -80% Loss Net......................... -64% Loss per 10 trades. If you have many 10 trade examples like that, you'll be washed up in a very short time. 10 Trade (Stock) Example of Proper Money Management: ((assuming equal dollars invested into each stock trade) five 4% winners = 20% Profit five -2% losers =-10% Profit Net....................... 10% Gain per 10 trades. Money management rules: 1: Equal trading account dollars need to be invested in each trade. 2: No trade should ever loss more than -2% to -2.5% of your total trading account value. 3: Trade winners need to be a minimum of 4% to 5% gain on your total trading account. 4: Reward to Risk: 2/1 minimum. With this formula it would take 40 to 50 consecutive losing trades to wipe out a trading account. Also, with this formula, your win/loss ratio can drop as low as 40% and you will still make a few bucks. Example of 40% Win/Loss ratio with proper money management: (assuming equal dollars invested into each stock trade) Four 4% winners = 16% Six -2% losers....=-12% Net......................... 4% Gain per 10 trades. "The trading wars are not won with occassional home run trades and hugh losers. They are won with modest steady gains and proper money management."
That made things a bit clearer, thanks. I'm wondering, when you are looking at charts for trends like that, how far back in time do you go? do you look at the chart of the past week, or the chart of the past 3 months, etc. I think i may want to try trading technically but i dont want to do it until i get a better understanding of it.
great post jeff, very good advice. i think what im supposed to take away from that is dont be stupid like me and wait too long for a stock to bounce back. Once its at -2%, its time to sell.