Why are the best trades winners from START?

Discussion in 'Trading' started by conpax, Nov 21, 2006.

  1. Light travels in all directions at the same time so it serves as a bad example; because of its dual nature as a particle and a wave (its particle nature allows it to travel in every direction at the same time, BTW), we find it difficult to compare it to objects that are ruled primarily by newtonian physics. Therefore, your example does not fit in here. (BTW, the speed of light is 186285 mph)

    The fact is that if you buy at market and the thing goes up 25 cents immediately, it may take significant sellers to sell the stock back down to where it was. Or, for it to come back down again, you may require massive pulling of bids so that even in a market that is not trading high volume, you see erratic price movements.

    Think of it this way: you drive 100 miles south. In order to get 100 miles north of where you started, you actually have to drive 200 miles north. I'm just saying that it behooves you to buy strength and sell weakness....unless you do so on the wrong side of a pivot point (as i've been doing lately).
     
    #21     Nov 27, 2006
  2. This is an illusion caused by your minds deletions, distortions and selective memories. It may also be created by stops that are too tight and stop trades out within reasonable noise.

    Assuming that you don't exit too early on ones that go against you a bit then you should be able to prove it by looking at your records. My own test was that when I was working out my stop sizes I recorded the maximum excursion within my "hold time period" and the view you have (which I used to have) proved untrue.

    Some of the greatest trades actually have a shaking out reversal at their start .... of course if your stop is too tight then these will not be good trades for you :(
     
    #22     Nov 27, 2006