the hardest thing about trading...

[ElectricSavant]

dac855,

Scaling did it for me. That is how I learned to manage that emotion. But it can be different for others. For some reason making the exit more complicated and in stages made it easier...go figure


2. Who has been able to fix this problem in your trading? I simply view it as a lack of personal discipline.

 

[sunggong]

Quote from DannoXYZ:

Sorry I meant in the past month, actually 5-weeks, 4-July -> 9-August. Really 70% from 4-July -> 4-Aug.

Now that's something I can understand, seeing how you're an options trader. Thanks for the clarification and good luck.

 

[DannoXYZ]

Quote from Hook N. Sinker:
I find the hardest thing in trading is to not trade. Honestly, doing nothing makes money for me.

I'm studying this fund DODGX. I calculate DODGX has a cumulative annual growth rate of 92 % and a turnover of about 15 %. The managers don't sell often. Returns are high. As I think back on my trades since 1990 it was the positions that I held for years that made most of the profit.

Be careful with the logic here in terms of cause & effect.

It is NOT hanging onto it for a long time that causes high-returns, but rather the other way around, it's giving you high-returns first, and that's why you hang onto it.

Examples of cause & effect:

1. tall basketball players. My mum always had the logic that because they play basketball, that they become tall. No, it's because they're good players first, that's why they're picked for the pro-teams and being tall gives you an advantage.

2. super-investor monkeys. Or mailing-list spam "brokers". Pick a large number of monkey/brokers, say... 256. Half of them picks YES on a stock, the other picks NO. Keep the ones that are right, odds are 50/50. Then with the remaining 128, half picks YES, half picks NO. Now you're down to 64, 32, 16, 8, etc. After 8 rounds, you're going to have a monkey/broker that's been right 8 times in a row! Is it the super-monkey that's a great investor? Nope, it's just the odds of large-numbers.

3. long-term gives maximum profits. Let's say you've got a portfolio of 16 stocks. Each month you reallocate your money and close out losing/underperforming positions. Then with the cash, you buy more of the winning stocks. Eventually, you have a portfolio with outstanding stocks, the best performing one being held the longest.

The "cause" of long-term holds is that the stock is making money. Thus you keep it to maximize profits and cause the "effect" of long-term holds. Like with tall basketball players, the good-performing ones are the keepers. That's why they're long-term. Hanging onto a stock long-term doesn't automatically make it give outstanding performance, as playing basketball doesn't automatically make one tall.