Forget about absolute such as "always". This business is mainly about money management and the discipline to stick to it. My best system has made 48% this year and had a win% of only 56%. So far for being "always" right. 56% batting average and winners bigger than losers, that's it. As you know, you can even make good money with less than 50% winners.
Why do losing traders always buy tops?
- Thread starter jsmooth
- Start date
Forget about absolute such as "always". This business is mainly about money management and the discipline to stick to it. My best system has made 48% this year and had a win% of only 56%. So far for being "always" right. 56% batting average and winners bigger than losers, that's it. As you know, you can even make good money with less than 50% winners.
I looked up "Poor Trader" on Investopia and this is what I found:
Poor Trader
A clueless trader or investor who buys tops or sells bottoms in stocks, recommends buying a stock right before earnings, even after a large runup, or tries in vain to call market turns.
These people generally get bad advice from "experts" on their "financial" websites, or they "follow the crowd" and end up with below average returns.
Typical Poor Trader:
<img src="http://rds.yahoo.com/_ylt=A9gnMiYDkpFFP3wBSoGjzbkF;_ylu=X3oDMTA4NDgyNWN0BHNlYwNwcm9m/SIG=12kdfi65n/EXP=1167254403/**http%3a//seattletimes.nwsource.com/ABPub/2005/10/26/2002585616.jpg""/>
Related Terms:
thorn
BlueStreek
Poor Trader
A clueless trader or investor who buys tops or sells bottoms in stocks, recommends buying a stock right before earnings, even after a large runup, or tries in vain to call market turns.
These people generally get bad advice from "experts" on their "financial" websites, or they "follow the crowd" and end up with below average returns.
Typical Poor Trader:
<img src="http://rds.yahoo.com/_ylt=A9gnMiYDkpFFP3wBSoGjzbkF;_ylu=X3oDMTA4NDgyNWN0BHNlYwNwcm9m/SIG=12kdfi65n/EXP=1167254403/**http%3a//seattletimes.nwsource.com/ABPub/2005/10/26/2002585616.jpg""/>
Related Terms:
thorn
BlueStreek
Here's my 2 cents...
I think it's a personality thing and how risk-aversed or risk-taker you are...
The strategy or system (2 different things) doesn't really matter as long as you are consistent with it and you understand the idea behind it... and it makes sense to you first and foremost...
But i think it's one thing that really matters: COMMON SENSE.
The most basic rule is buy low and sell high. What anybody understands by "high" and "low" is another thing... The higher the high the higher the certainty of a trade, but the lower the profit that can come out and vice-versa. The best thing is to be balanced in your timing, not too early and not too late...
If you got that figured out, you would understand that the higher you get in a trade the shorter time period you have to stick with it to pull out a profit .... It's COMMON SENSE really!
You don't hop into a trade and think the market is going to run just because you're in ... That means you are not being realistic...
Don't let yourself be fooled by all that tech-babble and books and stuff. Try choosing a simple yet logical strategy and then just think for yourself ... just like going shopping... make a budget and stuff, and set a threshold (of pain
) ) ...
Good luck.
I think it's a personality thing and how risk-aversed or risk-taker you are...
The strategy or system (2 different things) doesn't really matter as long as you are consistent with it and you understand the idea behind it... and it makes sense to you first and foremost...
But i think it's one thing that really matters: COMMON SENSE.
The most basic rule is buy low and sell high. What anybody understands by "high" and "low" is another thing... The higher the high the higher the certainty of a trade, but the lower the profit that can come out and vice-versa. The best thing is to be balanced in your timing, not too early and not too late...
If you got that figured out, you would understand that the higher you get in a trade the shorter time period you have to stick with it to pull out a profit .... It's COMMON SENSE really!
You don't hop into a trade and think the market is going to run just because you're in ... That means you are not being realistic...
Don't let yourself be fooled by all that tech-babble and books and stuff. Try choosing a simple yet logical strategy and then just think for yourself ... just like going shopping... make a budget and stuff, and set a threshold (of pain
) ) ... Good luck.
The psychology here is very easy to understand.
The average investor feels comfortable buying with the crowd...into strength. Invariably, there is weakness that follows, even if it is short term. The investor panics out, preferring to take the loss rather than take the heat.
If you're prepared to take the other side of that trade, there's a profit to be made.
Be greedy when others are fearful. Warren Buffett
That sums it up pretty much.
If you know your buying a top..why even take the trade?