Two ways to go broke trading a market

[Joe Ross]

There are two sure ways to go broke trading a market: picking tops and bottoms based on valuations, and taking trades based solely on indicator readings. When did the Japanese market become overvalued when the Price divided by the Earnings ratio was 30, 40, 50, 60, 70, or 80 to 1? When did silver become over-valued? The previous high before 1978 was $6.40, yet it rose to over $50 per ounce. When attempting to sell a top, focus on an intraday time interval suitable to the market traded. I use 1, 3, and 5 minute charts to trade the S&P mini with a pattern recognition reversal system. Any trader can find an indicator to agree with an opinion or analysis, but it must be confirmed with valid price action. A market is never too high to buy despite the over bought indicator, but may be too cheap to sell based on intrinsic valuation.

The trader who thinks he can pick tops and bottoms has a built-in self-defeating character flaw. That trader is selfish. He wants it all, from top to bottom, or
Bottom to top. Selfish is different from greed. Greed never has enough. The greedy trader stays in too long hoping for more. The selfish trader wants it all for himself, not willing that anyone else can have their piece of the market.

 

[Trader333]

The greedy trader stays in too long hoping for more. The selfish trader wants it all for himself, not willing that anyone else can have their piece of the market.

Trading is probably one of the most non altruistic activities possible. How can everyone have a piece of the market when profits are made by taking money off others ?


Paul

 

[PitBull]

who are you donaldwheresyourtrousers? Trader 333, I must say that you've been around a while and all you do is ask questions or give a few pointers, but a man of your reputation people would love to see some constructive posts or are you a bit shy. I for one would love to know how it's going and whether you are still employing irajs methods. Come on mate, how about writing some posts on how you trade.

 

[Donaldherewithmycock]

who are you donaldwheresyourtrousers?
.

******** its mr.doanldherewithmycock to you

 

[Trader333]

I did used to post exactly how I trade and have made many live calls and trades on this site for those who can remember far enough back. The reason I stopped is because I received a staggering amount of crap and decided that I was never going to post again on how to trade.

I have given a lot of help to people by pm but I will not be publicly posting detailed trading approaches and will be sticking to general principles only.

There is little point, in my view, in making life difficult for yourself on an anonymous bulletin board.


Paul

 

[PitBull]

agree Paul. Would be good if we could organize a night out. Invite Iraj and maybe dvdh would be interesting to say the least.

 

[KillPhil08]

I don't think there's anything wrong with picking tops or bottoms, saying "picking tops and bottoms" will make you fail is rubbish.

 

[new_trader]

I don't think there's anything wrong with picking tops or bottoms, saying "picking tops and bottoms" will make you fail is rubbish.

I'm not sure if that is what the article is implying. You won't go broke if you successfully pick the top or bottom but it's trying to do it every time that will send you broke. There is a subtle difference. IMO: The aim is to get your timing right, ie/ enter a trade when the market is most likely to move immediately in your favour, sometimes it is the very top or bottom and sometimes it isn't. But remember, there are many rallies and reactions within a trading day so it depends on what you define as the ‘top and bottom’. Is it for the day or for that particular rally or reaction!