money management problems
- Thread starter stockoptionstrader
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The only way to predict the outcome of a trade is to have the power to shape or fashion the outcome to what is desired. And since it is impossible to ALWAYS and accurately predict even by trade experts, I only invest the amount of money I can afford to lose just in case. That for me is money management.
Long term trading is really where the big money is made, but most will contend big money in day trading, which when you add in commissions and slippage(pip spread is slippage), on a small $5k account, day trading you will have to do 50-100% plus to breakeven in a year to cover fees. Day trading overall risk in a day is great deal more risk than long term trading if done correctly, day trading more exciting and long term is dull and boring, but when I put on "last" trade which I get to stay in a few years, it is accumulating profits and just contend with rollovers in Commodities, where you can risk $500 and make possible 10 to 100 times this. It is still boring, but don't have to stay glued to the screen, people realize sitting behind screen looking at specks of data for many hours-where is quality of life? You don't see Buffet doing day trades.
Takes many years to realize you will never get every dime, when you try to go for more, you can get less, targets works well for some and if you get them each day, you just accept, if you go for homerun profits, you might have to wait hours or days for one, it is about personality of what you can accept.
Takes many years to realize you will never get every dime, when you try to go for more, you can get less, targets works well for some and if you get them each day, you just accept, if you go for homerun profits, you might have to wait hours or days for one, it is about personality of what you can accept.
Lol this made my day.
The guy didn't get the difference between long trades and long term trades
The very common and usually the most costly trading mistakes I have noticed a trader can make is not clearly defining their risk and not cutting short your losses. This should be avoided because The fundamental principle of investing in Forex trade is to think first about preserving your capital before thinking about making money.
cutting losses should occur outside of modeled behavior of derivative.. when models break.
There is an interesting counter argument about sizing: In general yes but in some situation no. Perhaps a great trader/investor knows when to do which.
As Buffett said in one of his annual reports, all our life we waited for a few "fat pitches" and when you saw one, did you swing for the fence or did you just bunt?
In one of Druckenmiller's interviews he said the best thing he learned from Soros was to go all-in when an opportunity presented itself, like shorting the British Pound. Instead of betting just a small piece of their AUM they borrowed to the max to place their bet.
And then there is the "Big Short", same argument and outcome.
Bottomline, in most of our trades, we manage our size carefully but when opportunities present themselves perhaps we need to be more daring and bet the farm?
As Buffett said in one of his annual reports, all our life we waited for a few "fat pitches" and when you saw one, did you swing for the fence or did you just bunt?
In one of Druckenmiller's interviews he said the best thing he learned from Soros was to go all-in when an opportunity presented itself, like shorting the British Pound. Instead of betting just a small piece of their AUM they borrowed to the max to place their bet.
And then there is the "Big Short", same argument and outcome.
Bottomline, in most of our trades, we manage our size carefully but when opportunities present themselves perhaps we need to be more daring and bet the farm?
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