do these 2 posts conflict?

Originally posted by Gordon Gekko


I HAVE NEVER ADDED TO/SCALED IN/OUT OF A POSITION IN MY LIFE AND I SUCK!!!!! what does that tell you?!!?!?!?!?
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Whoa! Whoa! Whoa! You're getting a bit harsh on yourself. (and taking away the jobs of all those ETers that get their jollies from trashing other people :) )

Not having added to, scaled in, blah blah blah does not make you a bad trader UNLESS your system would be more profitable or less risky using those techniques and you refuse to adopt them. I think that the better traders know better than to blindly accept every so-called rule of trading. That adding to winners works for some (or even the majority) of traders does not imply that it will work for you.

Adding to a position is a second trade (its setup is simply the setup used by the first trade plus the added rule of waiting for further confirmation). Whether this second, add-to-the-winner, setup is valid is NOT guaranteed. Moreover, increasing the position size does increase exposure to some types of risks (e.g., I would be cautious adding to a winner just before the announcement of major economic news) . It comes down to whether the expected gain on the second trade justifies the expected risks (by which I mean BOTH the stop-loss setting and the likelihood of the trade going south).

Maybe adding to winners will work for you, maybe it will be disastrous -- that's up to you to test and decide. If you do discover that adding to winners is profitable without excessive risk, but still can't bring yourself to do it, then you do have problems.

As I see it the prerequisites for traders are:
1) an open mind (to listen to and learn from the market and other traders)
2) a spirit of unbiased, independent inquiry (to test these new ideas rigorously for yourself) and
3) a strong sense of discipline (to implement what works and stick with it)

I hope you do not give up just yet because of a nasty streak of breakevenness (aren't all the great traders supposed to blow-up their accounts first??? LOL!).

Best wishes,
Traden4Alpha

P.S. Thank you, tntneo and J_Commisso for the kind compliments.
 
Gordon,

You've said you have traded before and don't want to risk another $1. However, the nature of this business is centered around risk. You obviously know a lot more today than you did then, so what is keeping you from taking the dive?

I believe you are hesitant because you are fearful. Why are you afraid? If you are afraid you will lose, then you need to change your mindset and learn to deal with that fear and turn it into something positive.

I like you a lot and I think you are awesome. We chat a lot on AIM and I know you've got a lot of talent.

Let me tell you about my situation.

I have two systems that I've developed that seem to do very well. They are based on very simple paremeters but keep strict stops and other money-management techniques. I have been paper-trading for awhile with my systems (scalping and swinging) and they have worked well.

The 5k will be made available to me very shortly. The IB account is ready to go. How do I feel? I feel a little apprehensive, especially from reading the journals recently. No offense to anyone keeping a current journal, but they are all *not* making money right now.

However, at some point you have to take a deep breath, clear your mind, suck it up and take it like a man. If you want to become an expert on trading and write some books and spend your time in a library reseaching everything about mathematics, trading, etc -- do it. If you want to be a trader, then open an account with me and let's get this shit rolling.

Come on Gordon -- the water is great. It might be a little cold when you jump in, but it gets warm real fast (provided you can tread water in the 9 ft. section).

Let's do it.
 
Originally posted by Traden4Alpha
I hope you do not give up just yet because of a nasty streak of breakevenness (aren't all the great traders supposed to blow-up their accounts first??? LOL!).
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nah.. i won't quit. been at it too long and know too much to give it up. plus, if i were to quit and move on to something else, what's to say i wouldn't just quit when that got hard too? i need to stick at this even if it is difficult. i'm 24, so i have the time to figure this out. as i've said before, i may not know it all just yet, but i know a lot more than most 24 year olds when it comes to the stock market.

i'd like to make one more point about adding to winners. if you know you are going to add, it allows you to start with a smaller position at the start. this way, when you are wrong, your losses are smaller than if you had a full position.

why should i explain it myself, when it is already explained perfectly here:

"The protection is rule one but the biggest protection is rule two! Now I am going to tell you why rule two is the biggest protection of all. You never suspected what I am going to point out. You have all heard to not add to a loser! Well rule two takes care of that from the start by keeping you with a smaller entry position in the first place. You never have your entire position until you are getting the move you had expected.

Now why would I encourage you to have half of your total position at entry? Because it is a losers game from the start and you knew that from rule one. Now from rule two, you find out that in order to trade it correctly, you were never really suppose to have your initial position upon your entry of a trade.

I am giving you a rule which not only makes you larger when you are right but keeps you smaller when you are wrong from the start of a position.

Traders are over trading most of the time when they say that they can't seem to justify adding to an existing position. Most of the time a trader does not think about the reason for adding because they have their initial position on from the start. This is their maximum risk from the start. That is never what you want in trading.

You must take some risk but never your maximum. That is exactly what they are doing if they can not plan for added positions along the way."
 
Originally posted by aphexcoil
Gordon,

You've said you have traded before and don't want to risk another $1. However, the nature of this business is centered around risk. You obviously know a lot more today than you did then, so what is keeping you from taking the dive?

I believe you are hesitant because you are fearful. Why are you afraid? If you are afraid you will lose, then you need to change your mindset and learn to deal with that fear and turn it into something positive.

I like you a lot and I think you are awesome. We chat a lot on AIM and I know you've got a lot of talent.

Let me tell you about my situation.

I have two systems that I've developed that seem to do very well. They are based on very simple paremeters but keep strict stops and other money-management techniques. I have been paper-trading for awhile with my systems (scalping and swinging) and they have worked well.

The 5k will be made available to me very shortly. The IB account is ready to go. How do I feel? I feel a little apprehensive, especially from reading the journals recently. No offense to anyone keeping a current journal, but they are all *not* making money right now.

However, at some point you have to take a deep breath, clear your mind, suck it up and take it like a man. If you want to become an expert on trading and write some books and spend your time in a library reseaching everything about mathematics, trading, etc -- do it. If you want to be a trader, then open an account with me and let's get this shit rolling.

Come on Gordon -- the water is great. It might be a little cold when you jump in, but it gets warm real fast (provided you can tread water in the 9 ft. section).

Let's do it.
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aphie,

thanks for the compliments. i really do think there is hope for you, i really do. however, i didn't think i would lose a lot of money either. after you lose a few multiples of $10k, you might then realize you should stop playing with real money til you know what you're doing.

some people bash paper trading, but i don't. well, i do and i don't. i would say losing money is needed. it's like a punch in the face that wakes you up. however, once you realize this isn't as easy as first thought, i think it is wise to set some money aside so you can still play when you do know what you're doing. another benefit of playing with real money is that it will teach you to become unemotional after a while.

if you are unemotional about your trades (like i am), i don't need to lose real money anymore. i already understand the nature of the market, bid ask spread, slippage, etc. so i figure this into my paper trading. i keep track of all my trades in an excel spreadsheet as if they were REAL. i sell at the bid and i include commissions, etc. i do realize paper trading is not 100% realistic, but it's better than nothing.

anyway, i'm not telling you to trade with real money or not to. there are pluses and minuses to both.
 
Gordon,

That is a good post.

However, I look at it like this -- as sinister as the market may be when I start trading, it could never compare to the blackhole women cause in any man's wallet.

Even if the ROI of the market was negative, it would still be much greater than the ROI of having a girlfriend / wife.
 
Well then, let me put it this way, if after you put your first line on, you still have money to add to it, you didn't put enough on to begin with.

I'm not very impressed with some guy who claims he has balls, and adds to his position, when he was holding out from the git go.

Oh Gordon, what are we going to do with you? So you were breaking even when you were trading. Are you still breaking even now that you have stopped trading and started asking questions?

You don't learn anything when you make money. You should learn something when you lose money. That's why losers know everything and winners never know what to tell you.
 
Profitseer,

I don't see how adding to a winner has anything to do with having balls or being timid from the get go. I add to my winners because mathematicaly on the macro frame it makes sense and I have found over the years that what makes sense, often will make cents.

The idea is to simply have a bigger position on when you are right then when your are not right so that you are more right when you are right.

If by adding to a winning position the Rgain rises high enough to offset the decrease in win % than the expectancy will rise and a higher expectancy equals more GREEN. In the end that is the object of the project, no?

PEACE and good trading,
Commisso
 
Originally posted by Gordon Gekko
by the way, anyone like my new quote? there's a new sheriff in town. hehehe!!!!!
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well, the new sheriff has already left. lol

i am deleting the recent addition to my signature because i realized it is very hypocritical of me (although still true). what i had written suggests that people not put their dumb money into the market. but, as a trader, i am trying to capitalize on the dumb money. so my original quote is nice enough...

i guess i was just pissed cuz at the moment, my money is the dumb money.. heh
 
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