Contrarian Wisdom explained in 5 minutes

[ganglion]

Every bull market starts and ends in an almost identical fashion. The price rises as people rush into buying shares, hoping that the price will go even higher. Then, after everyone has exhausted his last penny, there are suddenly no more buyers left, and the market collapses in no time.

Written by: Niall Cassidy
Narrated by: Alastair Murden

Transcript: http://goo.gl/1lJmhQ
The book: http://amzn.com/B00BEB2R96

 

[Splitlink]

Every bull market starts and ends in an almost identical fashion. The price rises as people rush into buying shares, hoping that the price will go even higher. Then, after everyone has exhausted his last penny, there are suddenly no more buyers left, and the market collapses in no time.

Written by: Niall Cassidy
Narrated by: Alastair Murden

Transcript: http://goo.gl/1lJmhQ
The book: http://amzn.com/B00BEB2R96

I suppose that it is a kind of failed momentum trading. Traders buy in a pullback and it goes their way for a few points, then runs back into loss. Inexpert traders, whether veterans, or not, should think a lot about whether their entries are likely to run out of steam before they can get out of the trade.

Big, professiona,l money, is quite capable of standing the pain of a few points. More so, than the small punter.

On the other hand, a trader able to afford larger stops, especially if he is patient and uses the smallest stakes available, can compete better because professional money does not take unnecesary risks.

"Other Side of the Screen" thread might give an idea of professional thinking on this.