Bad advice that seems to make sense.

[sidinuk]

These are logical observations that 90% of traders swear by:

1. Small profits usually disappear as quickly as they appear in the market, so take a small profit as soon as you have it. "No one loses money taking a profit".

2. The market seems to consolidate more than it trends so you should try to buy the dips and sell the peaks.

3. The market trades through the same price points over and over again, so just hold on to that losing trade and eventually it must come back to your entry point.


Of course 90% of traders also lose money. Be one of the winning 10%, let profitable trades run, follow trends don't fight them and dump the losers quickly.

 

[waqr]

looks like I'm not the only one who is bored with the market today

 

[ChartMan]

Re No. 3. The poor guy who bought MONI ( et al) at , say a tenner. How long does he have to wait until he gets the price back to a tenner?
No3 is a very dangerous statement.

 

[sidinuk]

They are all dangerous statements but they all follow our natural instincts. It's why most people lose when they try to trade. The fist 2 will slowly deplete the account, waiting for that sucker punch that no 3 will deliver. Successful traders realise that the key to winning is not doing what the 90% that lose do.

Always remember: run winners, don't fight the trend and cut losers quickly. That's all there is to it.

 

[fudgestain]

The wonder of generalisations, huh?

1. You may need to take Small profits because the bigger ones you had anticipated sometimes do not materialise and you need to bail out before taking an unnecessary loss.

2. The market does consolidate more than it trends - the sum of the gyrations (ie Dow) is hugely greater than any net trend up or down which the conventional gurus of the world think you should follow.

3. Broadly the market often trades through the same price points over and over again. Sure it does - if they are not way wide apart. Same as point 2 above really. So yeah you can hang on to a losing trade if you know what you are doing but you may decide to exit and re-enter hopefully at a better price a bit later. Traders obviously hang on to losing trades when they have deep stops which may be exercised on the failure occasions of their strategy. But also what price points? Between 10, 20 or 100 points apart (ie Dow)?

 

[al-motor]

Fudge-

Do agree with the points- letting profits run like u say is very general- I guess, maybe u should know ur mkt and see if the price has enthusiasm to move or not- admittedly, taking profits is one of the hardest things to do- u aim for a tgt and sometimes price gets very near it, but then it retraces to get u out at a b/e at best and aloss at worst !!

 

[ChartMan]

Target analysis is a very important subject. Read about it, learn and inwardly digest. It's the best way to manage a winning trade.

 

[fudgestain]

Al-motor, yes, know what you mean.

You have sometimes to forsake a decent little profit if you are targeting .. you sell the market; it drops 25 points when you have an initial target of, say, 35; the market turning back up quickly retraces; I will now exit at my entry-5 (to cover the spread); no profit. But thats fine because I usually get my initial target; if so I exit half my position, say, and hold now for my bigger target with a planned fall back exit at my entry-5 if I fail to reach the bigger target with the 2nd half of my position. However if I've moved much closer to my bigger target I will raise my 2nd half planned fall back exit to the 35 level I took out my 1st half.

Its up to what data you have assembled and the probabilities you require; my set-ups give me very high probability outcomes otherwise I wouldn't use targeted/layered profit-taking.

Of course its not the only approach I can deploy.