The two most important words

This is a discussion on The two most important words within the Psychology, Risk & Money Management forums, part of the Methods category; Late on Friday just before the US market close Grandad and Grandson each took a small DOW short (despite the ...

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Old Feb 27, 2018, 10:43am   #1
 
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The two most important words

Late on Friday just before the US market close Grandad and Grandson each took a small DOW short (despite the strong finish) in case of bad news over the week-end. Come 11pm Sunday and the market re-opened about 40 odd higher. Grandad took the loss, Grandson decided to hold over until UK market open.

No joy, position even worse. “Should come back towards Friday’s close” opined Grandson who decided to wait for US open.

No joy, position even worse. “I’ll wait for it to come back some” said Grandson. “Remember the strong Friday close” cautioned Grandad.

No joy, position even worse and worse and worse. By the close Grandson was bewailing a 400 point loss and burst into tears.

“....And the most important two words in a trader’s vocabulary are?” asked Grandad.

STOP LOSS said a crestfallen Grandson.

“Keep those losses small and you’ll do ok” said Grandad “you often get away with waiting for it to bounce back, but day’s like today show you the folly of hanging on as you watch the gains from many hard earned trades disappear in a twinkling.”

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Old Feb 27, 2018, 11:36am   #2
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Hi Jon,
I'm assuming that Grandad taught Grandson how to trade and, if this is the case then, if I was the Grandson, I'd be looking to Grandad to cover my loss!
;-)
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Old Feb 27, 2018, 12:11pm   #3
 
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Hi Jon,
I'm assuming that Grandad taught Grandson how to trade and, if this is the case then, if I was the Grandson, I'd be looking to Grandad to cover my loss!
;-)
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Aye, poor old Grandad covers every damn thing atm
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Old Feb 27, 2018, 12:14pm   #4
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Hi Jon,
I'm assuming that Grandad taught Grandson how to trade and, if this is the case then, if I was the Grandson, I'd be looking to Grandad to cover my loss!
;-)
Tim.
Hmm, very worrying that there are grandad's out there teaching their grandchildren how to gamble
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Old Feb 27, 2018, 7:00pm   #5
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Hmm, very worrying that there are grandad's out there teaching their grandchildren how to gamble
Aye c_v, can't help but wonder what Grandson's mum 'n dad make of all this and what they think of (Gran)dad! Oh how I'd love to be a fly on the wall in Jon's family right now.


Still, so long as the youngster's learnt his lesson - that's all that really matters.
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Old Feb 27, 2018, 7:07pm   #6
 
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oh more more riddles... oy vey

WE DAYTRADERS ARE IN THE TRENCHES HERE, screw the riddles

taking a trade i'm underwater almost immediately, now give me another riddle for THAT for christ sake
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Old Feb 27, 2018, 7:16pm   #7
 
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oh more more riddles... oy vey

WE DAYTRADERS ARE IN THE TRENCHES HERE, screw the riddles

taking a trade i'm underwater almost immediately, now give me another riddle for THAT for christ sake
Don’t let the water rise further than your knees, good sir
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Old Feb 27, 2018, 7:19pm   #8
 
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Don’t let the water rise further than your knees, good sir
another riddle , riddles upon riddles

looking for CLUES, not riddle
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Old Feb 27, 2018, 7:22pm   #9
 
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another riddle , riddles upon riddles
Well, the market’s a riddle isn’t it?
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Old Feb 27, 2018, 7:33pm   #10
 
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i think you figured it out don't blame you for not telling the rest of us...

but do you have to "pull our wings" off like a helpless hapless fly, just because you can
Nah, don’t know anymore than you do. Just thought you’d like the story - grandson had heard the words but I think he believes them now.
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Old Feb 27, 2018, 8:51pm   #11
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oh more more riddles... oy vey

WE DAYTRADERS ARE IN THE TRENCHES HERE, screw the riddles

taking a trade i'm underwater almost immediately, now give me another riddle for THAT for christ sake
"Livermore The Sucker – Part 1
It was only after going broke twice and then making much less profit in a raging bull market than he would have expected to that Livermore realized he was trading like a sucker. He was losing his profit because he was trading every day for the sake of trading. This, he realized, made him a “Wall Street Fool”.

“Whenever I read the tape by the light of experience I made money, but when I made a plain fool play I had to lose. There was the huge quotation board staring me in the face, and the ticker going on and people trading and watching their tickets turn into cash or into waste paper. Of course I let the craving for excitement get the better of my judgment.”

After he had learned to trade less, Jesse Livermore’s profits soared."

https://jesse-livermore.com/trading-...s-suckers.html
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Old Feb 27, 2018, 9:45pm   #12
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grandson had heard the words but I think he believes them now.
Believing and practicing are two different behaviours. The odds are against it as the general population is risk seeking involving sure losses. This disposition effect has been long established from the 1979 Tversky study. Speculators do have problem cutting losses without concerted psychological reconditioning.
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Old Feb 27, 2018, 9:52pm   #13
 
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Believing and practicing are two different behaviours. The odds are against it as the general population is risk seeking involving sure losses. This disposition effect has been long established from the 1979 Tversky study. Speculators do have problem cutting losses without concerted psychological reconditioning.
Absolutely, but at least he’s got past the initial “denial” stage (seduced by bounce backs after being stopped out).
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Old Feb 28, 2018, 12:54pm   #14
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Absolutely, but at least he’s got past the initial “denial” stage (seduced by bounce backs after being stopped out).
Or simply play bounce back trades with a stop, at the right times of the day, wont go far wrong - be it grandad or grandson

There was another "potentially" good thread started a couple weeks ago about results deteriorating when they carried on throughout the day. This thread has now gone quiet, as no one wants to take it further???? Man this is the HOLY GRAIL!!! But you cant see when one doesnt know what they are looking for

Step back and see why methods must be executed at the correct times, to be worthwhile. Link the 2 together (method and time of day) and if keeping a stop and limit in place one wont go far wrong. Time of day is EVERYTHING.

Detouring the thread now, sorry.

Good story to start debate though
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Old Feb 28, 2018, 1:00pm   #15
 
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Or simply play bounce back trades with a stop, at the right times of the day, wont go far wrong - be it grandad or grandson

There was another "potentially" good thread started a couple weeks ago about results deteriorating when they carried on throughout the day. This thread has now gone quiet, as no one wants to take it further???? Man this is the HOLY GRAIL!!! But you cant see when one doesnt know what they are looking for

Step back and see why methods must be executed at the correct times, to be worthwhile. Link the 2 together (method and time of day) and if keeping a stop and limit in place one wont go far wrong. Time of day is EVERYTHING.

Detouring the thread now, sorry.

Good story to start debate though
Aye, reversal times for ftse 9am, 10am, 3pm (Dow reversal time) - well worth keeping an eye out.
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