Right???That's what I thought...this financial advisor boss I had bragged about his dollar cost averaging on his positions.... Also this MBA friend I have hyping up DCA......In my head I thought PTJ said losers average losers....but never knew they were the same ideology. So only for traders....losers average losers? Or are investors also under the same rule....I know you said for buy and holders its different....but...
I agree with this -- it made me think of a movie quote: "Yeah, well, I'm a Marine. We don't plan. We improvise." --Keenan Ivory Wayans, Most Wanted. 1997 Sometimes the market doesn't go the way you expected it to, that's just simply the nature of the market beast. -- and you have to kind of think quickly on your feet; reevaluate the scenario unfazed with clarity.
We all have opinions based on our own life's experiences, I co-owned a brokerage back in the 90s which allowed me to see what most never get to see, immerse failure. At the time of someone opening an account with $20k for Futures account and they day traded, over 90% of the time they were under $10k in two months and either closed account or had to put more funds in. So many people have to work either days/nights to pay the bills, they don't have the time to stare at screen all day long for months/years, they open forex accounts and underfunded and under educated, and all think they are special at it, they have some system that not well tested, but they just know it will work, they have memorized nothing and small losses become large losses as they doing back testing during the trade. Ok, entering 2 trades a week, if so lucky to have 2 viable trades to even have as something months go by before I have something, but if done in my case "right way", you have back tested 10-25 years of data, you have every answer for every question and you memorizing chart patterns. It just too hard IMO to memorize and learn enough inside several months to day trade well and cause you don't have the education of taking time long term, you don't have well rounded Trading Plan. And yes had 22 losing trades in a row, but the back testing prepared me for this, it did not prepare for losing my cheery disposition, and in day trading, most never get past wanting to hurt and maim anyone any so many lousy days of day trading in learning process when you not prepared well enough. My long term commodities system is the lowest winning percentage system I have ever traded or seen if only based on futures contracts, but I look at overall position with the hedging and that changes the game. And since most of what I have accumulated through the years been through long term, why I come to the conclusion I have. You trade long enough, like any profession, you sometimes don't even notice you doing it till alarm goes off and time to stop. There frustration at times, but after I stop, don't remember much whether market was up or down on day, unless I had huge loss day-I remember those, LOL
Investors and traders follow different rules. Among other things, investors base decisions on FA. Traders rarely do that. I don't often agree with Jim Cramer but one thing he said that I do agree with is: Never let a trade turn into an investment. You enter a trade because you're confident of the direction it should go. If it goes against you, you get out. Period. If you don't, you're not really a trader, you're somebody who's trying to switch roles from Trader to Investor in midstream. And if the instrument isn't one you would have chosen for a long-term investment at the outset ... oh boy.
What are the biggest mistakes a trader should avoid in stock trading? 1. Never take a laxative just before the market opens. 2. Never take Viagra just before the market opens. 3. Never take Viagra and a laxative together. You won't know if you're coming or going.
Failing to use a properly back-tested and validated system. Proper back-testing will reveal that mistakes will be made before you actually make them. It would've revealed many/all? of the mistakes posted about in this thread. It would have revealed that you could have lost 30% of your capital before you lost it. It won't give you a good system. It tells you whether you have a good system. With proper backtesting, you simply won't trade with real money at all until you've evidenced, through proper back-testing, that you've discovered a system that actually seems to work.
http://www.theatlantic.com/business...-to-know-about-high-frequency-trading/360411/ " Everything You Need to Know About High-Frequency Trading Why the algobots that rule Wall Street are good—and why they're evil, too [...] "