The Wit and Wisdom of Justin Mamis

[dbphoenix]

We have to understand that all stock market decisions -- each and every one, including doing nothing -- involve risk. Some people believe they can minimize their risk by relying on the cop-out "risk/reward ratio" cliche: "Ten points potential reward compared to 5 points potential downside" becomes "okay to trade" without even the slightest consideration of what the chances are that the stock will actually move in the undesired direction. It is the risk itself that needs to be analyzable, not the potential reward. The stock might already have moved extensively; the reason might already be known; support underneath might be flimsy; the stock hasn't moved yet even though the market is already up a lot; and so on. Not until we grasp the extent of and kind of risk should we consider the degree of reward. Hope has never kept a stock up when it was doing things wrong.

JM

See also The Wit and Wisdom of Richard Wyckoff

 

[dbphoenix]

. . . there's nothing like being blinded after you're proved wrong to miss the next chance to be right.

JM

 

[Joey]

. . . there's nothing like being blinded after you're proved wrong to miss the next chance to be right.

JM

I guess this is what Mark Douglas refers to as "Being available", have to admit that personally I had an immense uphill struggle with this aspect of trading, to focus on the next opportunity which I could clearly identify, but hesitated to take due to being stopped out on the prior trade.
Well have made progress now as the Truth of "Anything can happen in the Markets" is gradually sinking in.

 

[firewalker99]

I guess this is what Mark Douglas refers to as "Being available", have to admit that personally I had an immense uphill struggle with this aspect of trading, to focus on the next opportunity which I could clearly identify, but hesitated to take due to being stopped out on the prior trade.
Well have made progress now as the Truth of "Anything can happen in the Markets" is gradually sinking in.

My problem is exactly the opposite, after a losing trade, I have a tendency for revenge trading, although I'm managing to control it. I know step away from the screen, even if just for a couple of minutes and read my checklist again out loud. Still, I find discipline tough. This week for instance, I missed a perfect trade because my entry (limit order) was just missed. By half a point! I got frustrated and wanted to chase price, but choose wisely not to do it. I said to myself: the pain of a missed opportunity is nothing compared to the pain of losing out more money after a foolish act...

 

[erierambler]

Do not be mislead into thinking that a steeply oversold reading means that the worst is over and it is now safe to hold. Just as a huge overbought reading on an initial rally means there is much more upside to come, a drop to an extremely oversold level , coming on an initial slide, can be quite negative ; such markets often stay oversold for a while. JM

 

[Splitlink]

My problem is exactly the opposite, after a losing trade, I have a tendency for revenge trading, although I'm managing to control it. I know step away from the screen, even if just for a couple of minutes and read my checklist again out loud. Still, I find discipline tough. This week for instance, I missed a perfect trade because my entry (limit order) was just missed. By half a point! I got frustrated and wanted to chase price, but choose wisely not to do it. I said to myself: the pain of a missed opportunity is nothing compared to the pain of losing out more money after a foolish act...

Whichever way you do it, it's emotional trading. I'm inclined to freeze after a big move, whether I was in it, or not! Sort of, poke it with a stick to see if it moves

Split

 

[firewalker99]

The irrational fear

If the stock has gone up, will it go up more? Or is this the time to sell? Or, if it has gone down, will it slide some more or turn around and go up at last? Probably the minute after I sold it! Should I take the small loss now? Could I swallow such a huge loss or should I at least wait for a rebound? Oh wait, now that it's finally rebounding, should I hold until I'm breakeven? Now that I'm even, shouldn't I reward my patience by aiming for a gain?