100% Guaranteed Way to Blow Up ANY System
- Thread starter Kensho
- Start date
Yeah leverage is the destroyer of all investment/trading strategies. Leverage never makes a bad strategy a good strategy but always/eventually blows up even the best strategy. A small trader that is forced to use leverage is wise to eliminate it as his account grows.
Seth Klarman delivered 20%+ returns for 30 years with no leverage and having cash levels above 50% at times. So you really don't need leverage for great returns just patience.
But patience gets Forced away from a trader using stops because he is Forced to use them due to the amount of leverage he uses and thus he gets Forced to exit the position usually that the price he originally wanted to enter. And using stops usually leads to impulse entries due to the illusion of safety they provide.
The only true risk management is: (1) limiting leverage (2) proper diversification and (3) patience to wait for the fat pitch. Then you can have infinite patience with the position and basically dare the other side to run the stock to zero (which NEVER happens high quality businesses).
Everything else in trading is pure garbage. Futures is garbage with 30-1 embedded leverage. Same with options with their leverage + time decay. Indicators are useless. Stops are for losers. Gurus like NoDoji and Jerk Hershey are garbage. And lastly the "the trend, is regrettably, not your friend."
Seth Klarman delivered 20%+ returns for 30 years with no leverage and having cash levels above 50% at times. So you really don't need leverage for great returns just patience.
But patience gets Forced away from a trader using stops because he is Forced to use them due to the amount of leverage he uses and thus he gets Forced to exit the position usually that the price he originally wanted to enter. And using stops usually leads to impulse entries due to the illusion of safety they provide.
The only true risk management is: (1) limiting leverage (2) proper diversification and (3) patience to wait for the fat pitch. Then you can have infinite patience with the position and basically dare the other side to run the stock to zero (which NEVER happens high quality businesses).
Everything else in trading is pure garbage. Futures is garbage with 30-1 embedded leverage. Same with options with their leverage + time decay. Indicators are useless. Stops are for losers. Gurus like NoDoji and Jerk Hershey are garbage. And lastly the "the trend, is regrettably, not your friend."
TRADING (particularly with leverage)--- second only to being a member of this forum.
