That's what I've been trying to get at, I guess. IMHO, as traders get more "edukated", they start fucking their trades up. Whereas before they simple looked, observed and "felt" the direction of the price momentum from the ticker/spread/chart, now that they are introduced to all kinds of fancy bullshit TA they think they simply NEED that indicator to make a trade. It's like those great marketing campaigns. If there's no need/want/desire, then CREATE one! Conspiracy anyone?
the reality is, the thread title is a myth. Noobs have poor money management, trade management, little concept of using leverage, and are prone to gambling mentality. If you average together all noobs, you would likely find it was a disaster...
1) it's beginner's luck. 2) another reason the beginners tendency to KISS.. i believe this is the reason - keep it simple
Hmm...perhaps I should have clarified. By noobs I meant those who trade for the first time ever, or second, or third. But experiences differ for everyone so I can't really attribute mine to everyone else. Just thought it'd make for a good discussion of how we tend to focus too much on educating ourselves in all the analysis methods, when the simplest, most natural and best "method" to trade is simply follow the trend/momentum.
In the days of sail it was the Greenhands that were least likely to fall from the rigging the more seasoned hands had the highest death rate. Over confidence and familiarity its a lethal combo.
When I started out, I didn't have a losing trade for over two months. I made over $40K in that time period. I didn't have a direct access trading platform; I simply logged into my Etrade account on-line and used the basic platform that was a bit delayed and you had to hit the browser refresh key over and over to see price movement. I never heard of moving averages, stochastics, volume, keltners, bollingers, MACD, Elliot waves or anything else. My strategy was as simple as it gets. When a stock price opened up gapped down a whole lot on news that didn't seem fundamentally terrible, I'd buy it and then sell it a day or two later for a very nice profit. Once or twice a stock continued down further, but I simply averaged down and within a couple weeks took profits on the oversold bounce that finally occurred. One other thing I learned very early on is when a company "raised guidance", it was buy signal no matter what price it trading at. I'd buy it and then sell it a day or two later for a nice gain. I quickly noticed a correlation between "raised guidance" and strong upward price movement. (This still holds true and counter-trend/RTM traders often get killed on fading raised guidance moves on the day or two surrounding the news). This massive success came during the bull run off January 2008 lows. It was a buy every dip environment in a strong uptrend. I had visions of being a multi-millionaire in a few years. Then the market turned and I was still in a "buy the dip" mode, as it was all I ever knew. Suddenly averaging down quit working, price dropped much further than you could imagine, support levels were broken again and again. I lost all my profits and significantly more before learning about such things as trends and rising/falling moving averages. I started day trading and learned to take short positions as a result of these failures. My day trading was always quite successful, but I continued to throw chunks of money out the window on swing trades before finally truly understanding trends and the fact that there is no such thing as price too high or too low. Now I'm strictly a day trader and that's working out fine for now.
Reading this it hits home like a ton of bricks. I often get caught doubling down thinking "it can't possibly go lower than this", and hasn't for months, but it does. And I'm a real sucker for getting pained out, like in MYL last week I got out at 20.56 ( lost $1600.)only to have it bounce off 20.52 and keep going past the open while I flippin sat paralyzed by it. Currently down $900+ in CENX hoping the merry month of May rescues me.
Buy dips in an uptrend, sell on rallies in a downtrend. Is this all a day trader needs to know to succeed? Those $350 I made were simulator money, but looking back I think it was one of the best lessons in trading for me.
It really is as simple as the more experience we get the smarter we think we are. At the start when you know nothing you keep it simple! Then after a couple of good trades the market kicks your a$$. Traders have to remember the market is never wrong, they are. The top 5 guys on the floor I work on are the guys who are doing the same things as when they started