Try using that same strategy at the craps table.
Say for instance that you always bet on the PASS and would always take full odds available. Now say that you end up losing as everyone does.
If you then use the idea that IF you had bet on the DONT PASS on every single bet you made instead of the PASS, you might think you would have made money right?
Note: for anyone who does not understand how to play craps, a quick explanation is that when you bet the PASS you are hoping the shooter will win and if you bet the DONT PASS, you want the shooter to lose.
Note 2: For those that really want to know how craps works, on the come out roll, if you are betting on the PASS, if the shooter rolls a 7 or 11 you win, a 2,3, 12 you lose. If you are betting the DONT PASS, a roll of 7 or 11 you lose, a 2 or 3 you win, and a 12 is a push.
After the point is established, if the shooter rolls his point, a PASS line bet wins and a DONT PASS loses.
The house advantage is simply that the 12 is a push.
The guy's strategy of switching tracks and I assume going long on the stocks you were shorting and vice versa.
This may work if you are using a specific method to go long or short a stock.
As everyone else has alluded to, your head may play games on you.
If you would normally look at a stock and say for example "this stock is a great value at this price, I am buying it."
Your gut feeling about stocks may actually be right. It might simply be your timing that is off.
To give you an example of what I am talking about. I recently went long on ALO (May 6th, I believe). I had bought it @ 11.60 (the absolute worst price to get for the stock that day). It proceeded to go down to 10.70. I cut my losses at 10.85 (stupid me!). The stock is now trading at 12.
If I had shorted the stock at 11.60, yes I would have enjoyed a nice (short term )ride down, but that is only part of the puzzle. When should I have covered? If I had kept my long position open, I would be a winner right now. If I had shorted it, I would have said to myself, wow, I guess doing the opposite is a great thing to do after all. But, now I would be cursing the short position.
I think this example clearly shows that its not hitting the exact highs and lows of every stock, but overall making the correct decisions.
I have found that dollar cost averaging has been the most effective trading tool ever conceived and used.
As far as having stop losses in place, I think they can help, but I would not have made the money in the market I have if I kept cutting my losses on long positions. I tend to buy stocks I consider extremely undervalued with risk/return ratios that are very attractive.
Two of my biggest winners I ever had were MXT and ACF. I had strated buying ACF at $3/share and kept buying it all the way down to 1.55. I was buying 5000 share blocks below $2/share. ACF is now well over $20/share. If I had cut my losses on it and sold off when it went below $2, I would never have made the money I did on it. Same with MXT. take a look at those stock charts the past 2 1/2 years. March 19,2003, I made $35,100 on MXT. It was the #1 stock gainer of the day. I had been buying it when no one else wanted it. TSO is another example.
It doesnt always work as my TWRAQ will show, but I still like my batting averages.
Say for instance that you always bet on the PASS and would always take full odds available. Now say that you end up losing as everyone does.
If you then use the idea that IF you had bet on the DONT PASS on every single bet you made instead of the PASS, you might think you would have made money right?
Note: for anyone who does not understand how to play craps, a quick explanation is that when you bet the PASS you are hoping the shooter will win and if you bet the DONT PASS, you want the shooter to lose.
Note 2: For those that really want to know how craps works, on the come out roll, if you are betting on the PASS, if the shooter rolls a 7 or 11 you win, a 2,3, 12 you lose. If you are betting the DONT PASS, a roll of 7 or 11 you lose, a 2 or 3 you win, and a 12 is a push.
After the point is established, if the shooter rolls his point, a PASS line bet wins and a DONT PASS loses.
The house advantage is simply that the 12 is a push.
The guy's strategy of switching tracks and I assume going long on the stocks you were shorting and vice versa.
This may work if you are using a specific method to go long or short a stock.
As everyone else has alluded to, your head may play games on you.
If you would normally look at a stock and say for example "this stock is a great value at this price, I am buying it."
Your gut feeling about stocks may actually be right. It might simply be your timing that is off.
To give you an example of what I am talking about. I recently went long on ALO (May 6th, I believe). I had bought it @ 11.60 (the absolute worst price to get for the stock that day). It proceeded to go down to 10.70. I cut my losses at 10.85 (stupid me!). The stock is now trading at 12.
If I had shorted the stock at 11.60, yes I would have enjoyed a nice (short term )ride down, but that is only part of the puzzle. When should I have covered? If I had kept my long position open, I would be a winner right now. If I had shorted it, I would have said to myself, wow, I guess doing the opposite is a great thing to do after all. But, now I would be cursing the short position.
I think this example clearly shows that its not hitting the exact highs and lows of every stock, but overall making the correct decisions.
I have found that dollar cost averaging has been the most effective trading tool ever conceived and used.
As far as having stop losses in place, I think they can help, but I would not have made the money in the market I have if I kept cutting my losses on long positions. I tend to buy stocks I consider extremely undervalued with risk/return ratios that are very attractive.
Two of my biggest winners I ever had were MXT and ACF. I had strated buying ACF at $3/share and kept buying it all the way down to 1.55. I was buying 5000 share blocks below $2/share. ACF is now well over $20/share. If I had cut my losses on it and sold off when it went below $2, I would never have made the money I did on it. Same with MXT. take a look at those stock charts the past 2 1/2 years. March 19,2003, I made $35,100 on MXT. It was the #1 stock gainer of the day. I had been buying it when no one else wanted it. TSO is another example.
It doesnt always work as my TWRAQ will show, but I still like my batting averages.
