simple strategy....but very profitable

V

voltrader

Article in a local publication today about a middle aged woman who has made a fortune .... and all she does is buy a stock and then sell it when it is either 10% up or down.
So why not pick hi-probability patterns and a low commission discount broker and do the same.....hi-prob pattern only needs to come in 6/10 times (if it doesn't then just reverse it!)

$10,000 per trade
6 wins $6000
4 loses $4000
gross profit $2000
minus 10 commissions x2x$15 = $300net profit $1700
 
Originally posted by voltrader
Article in a local publication today about a middle aged woman who has made a fortune .... and all she does is buy a stock and then sell it when it is either 10% up or down. So why not pick hi-probability patterns and a low commission discount broker and do the same.....hi-prob pattern only needs to come in 6/10 times
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Hmmm, let's see, so if it's 10% down.....she just lost 10%. A lot of those 10% losses can sure put a serious dent in your capital. As to patterns that "only" need to come in 6/10 times, I'm reminded of one of Gary B. Smith's quotes:

"A good technician gets it right maybe 60% of the time. And a great technician, maybe 61% of the time."

In other words, if you think that picking patterns with a consistent 60% hit rate is a piece of cake, then you are kidding yourself.
 
Originally posted by voltrader
magna
so if I can't get 60% - how much do you suppose I can get?
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I don't have any idea how good/bad of a technician you are.....But don't get stuck on the percentage of hits, as you can make money with 50%, 40%, or even less -- as long as you have good position sizing and tight money management.
 
Originally posted by voltrader
.... and all she does is buy a stock and then sell it when it is either 10% up or down.
So why not pick hi-probability patterns and a low commission discount broker and do the same.....hi-prob pattern only needs to come in 6/10 times (if it doesn't then just reverse it!)
QUOTE]

Yeah...this process is called "trading."

Maybe some of you have heard about it? It's like being a casino. Your slight edge adds up over the long run. I think the 10% rule would depend on the market, though. Probably depends on the setup, position size, volatility, acceptable risk, etc.

Shit, seeing when something is ready to go up or down is the easy part. The hard part is getting executed at that price and placing stops appropriately (not to mention keeping your confidence).:D
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Just buy or short at any point that the market is going your direction. Don't take on a position larger than prudent money management principles would allow. Set your stops. Take a profit when it is presented. In theory this should work.... I'll never trade this way though. :)

~EC
 
Voltrader,

This may not be the nicest way to say this, but it is just my humble opinion, so here goes:

If you are really as naive as your opening question suggests, my advice to you is to BE VERY CAREFUL. You are going to read alot of nonsense on this board from people who say that trading is easy and that you can learn how to do it overnight. If that were the case there would be many more people doing it (and more would have survived the market meltdown).

Unfortunately, as you will see in other posts even many professional traders disagree on what is good advice and what is bad. Eventually you will need to distinguish for yourself what works and what doesn't -- try to make the learning process as painless as possible. Having a mentor helps, but remember that NOBODY knows everything about the market.

I agree with bung's casino analogy. Think of the market as the house. It is very difficult to beat the house over time, but it is possible depending on which game you choose (there's a reason casinos kick you out if they can tell you're counting cards).


Hope this helps get you started in seeking out real trading knowledge.

Good luck.

Bill
 
Article in a local publication today about a middle aged woman who has made a fortune .... and all she does is buy a stock and then sell it when it is either 10% up or down.
So why not pick hi-probability patterns and a low commission discount broker and do the same.....hi-prob pattern only needs to come in 6/10 times (if it doesn't then just reverse it!)

$10,000 per trade
6 wins $6000
4 loses $4000
gross profit $2000
minus 10 commissions x2x$15 = $300net profit $1700



I saw this and think it is a great idea. What I am going to do is talk to Goldman Sachs about giving me a ton of money to use this proven method. I will boost there marketmaking profit's by many fold's. So wish me luck.
 
Article in a local publication today about a middle aged woman who has made a fortune .... and all she does is buy a stock and then sell it when it is either 10% up or down.
So why not pick hi-probability patterns and a low commission discount broker and do the same.....hi-prob pattern only needs to come in 6/10 times (if it doesn't then just reverse it!)

$10,000 per trade
6 wins $6000
4 loses $4000
gross profit $2000
minus 10 commissions x2x$15 = $300net profit $1700

Everyday it becomes more clear why so many trading floors are empty.
 
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