Prudent Risk Management Is The Only True Edge In TRADING

Is Prudent Risk Management the only true edge in trading?

  • Yes

    Votes: 53 29.9%

  • No

    Votes: 124 70.1%
  • Total voters
    177
No offense taken. Investor or trader doesn’t matter. The money is all figured as capital gains at the end of the quarter. Thank goodness for section 1256.

taowave said:
Hey,in no way is that meant as an insult. And that's before I knew of your timing...:)
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comagnum said:
Funny how those that shout the loudest about how stupid they think it is to use a stop loss are often those that are down -50% on a trade.
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If you are referring to me, Gumby, I’m not shouting anything. I responded to a person who deserved a thoughtful answer from me.

Yes, letting a trade go -50% would be stupid and you should use a stop loss since that is your fear. It’s difficult to be rational when trading scared. Use protection.

Edit: No surprise at all you got a like from Lotsa Fear. Look up “scared trading” in Investopedia and you’ll see his mug.
 
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savoir said:
If you are referring to me, Gumby, I’m not shouting anything. I responded to a person who deserved a thoughtful answer from me.

Yes, letting a trade go -50% would be stupid and you should use a stop loss since that is your fear. It’s difficult to be rational when trading scared. Use protection.

Edit: No surprise at all you got a like from Lotsa Fear. Look up “scared trading” in Investopedia and you’ll see his mug.
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I am referring to a few years ago that were on a constant rant about how stupid they thought stop losses are. One of them was sitting into a plunging position for the better part of the year - the other had to much leverage & blew up their acct.

I am always plastering my trading journal with quotes that catch my attention - here are a few on stop loses. Sometimes I use alerts & exit manually - the thing is I will take the exit every time - when newer, I would justify often change my mind & let the losing trade run way to far.

Stop Loses
Being able to honor your stops is what separates you from the mongrels on Wall street. Pit Bull
I'm always thinking about losing money as opposed to making money. Don't focus on making money, focus on protecting what you have. Paul Tudor Jones
There is not trade more beautiful than a well placed stop loss. CIS You lose!
Love your stops, not your stocks. Dan Zanger
Always use a hard stop! Traders at 7 Points trade tens of thousands shares – they have to use a hard stop, don't think your above it. Phil Goedeker
Stoping out of a loser is simply playing for a better position . My number one rule is: Don't try to make a profit on a bad trade, just try to find the best place to get out. Linda Raschke
The most important thing is when to exit. You must put your effort & focus on minimizing the loses, then your profit will grow naturally. BNF
I'm always thinking about losing money as opposed to making money. Don't focus on making money, focus on protecting what you have. Paul Tudor Jones
 
Stops include hard stop (most common), time stop (like 5-10 mins) and mental (soft) stop. I tried the latter two but couldn’t do it consistently, so I finally bite the bullet and programmed a hard stop in every trade, not intending to get hit every time.
 
comagnum said:
I am referring to a few years ago that were on a constant rant about how stupid they thought stop losses are. One of them was sitting into a plunging position for the better part of the year - the other had to much leverage & blew up their acct.

I am always plastering my trading journal with quotes that catch my attention - here are a few on stop loses. Sometimes I use alerts & exit manually - the thing is I will take the exit every time - when newer, I would justify often change my mind & let the losing trade run way to far.

Stop Loses
Being able to honor your stops is what separates you from the mongrels on Wall street. Pit Bull
I'm always thinking about losing money as opposed to making money. Don't focus on making money, focus on protecting what you have. Paul Tudor Jones
There is not trade more beautiful than a well placed stop loss. CIS You lose!
Love your stops, not your stocks. Dan Zanger
Always use a hard stop! Traders at 7 Points trade tens of thousands shares – they have to use a hard stop, don't think your above it. Phil Goedeker
Stoping out of a loser is simply playing for a better position . My number one rule is: Don't try to make a profit on a bad trade, just try to find the best place to get out. Linda Raschke
The most important thing is when to exit. You must put your effort & focus on minimizing the loses, then your profit will grow naturally. BNF
I'm always thinking about losing money as opposed to making money. Don't focus on making money, focus on protecting what you have. Paul Tudor Jones
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I appreciate the clarification. The stop loss is a sacred cow. You have an impressive collection of quotes in support of that and give two examples of losers who refused to believe and got what they deserved. All is well.
 
My experience has been 90% of stops will be hit sooner or later, except your stop is at the daily high/low or 2nd daily high/low.

Even so I still programmed a hard stop in every trade knowing that it will get hit. It’s for my own protection and my plan is to exit before the stop is inevitably hit, either on winning or losing trades. The rationale is my largest losses have always been the market going against my positions beyond my wildest imagination on losing trades.
 
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