I am in do doubt with regards to being a fool! You often say you "know nothing". Well I know nothing, however I think it is the
wrong nothing that I know
For me, one of the intentions of this thread is to: Recognise that the larger players conducting this 'wealth transfer' you talk about capitalise on the limitations of knowledge, thought processes and most importantly the behavioural weakness' of us uninformed fools.
Recognising these limitations, and the advantage it provides informed traders is a good first step. No?
After all why would this thread be in the risk management section rather than say a systems thread....
Just spitballing...
I keep coming back to this thread as I find it fascinating that one post can garner 400 odd pages of Socratic Dialogue....
DP, i seen a recent post in another thread, which I will not mention, but the person talks about big money and big trades, but, to some of us who sit back and think, things just do not add up, so, who is the fool in this case, the person with lots of money posting silly statements on a public forum, or, those who read such and take it as truth just because some unverified screenshots were posted!
Truth is, all trading involves risk, no matter what - if you have enough money then you can easily handle a drawdown of say $100K, and easily wait for the markets to come back and then cash in - this is how mm's operate on a much bigger scale, no guessing there!
In order to extract some money, without having the luxury of lots of money, then one must be very selective in what, and more importantly, when, one decides to enter the market!
Many are led to believe that easy money can be extracted by using systems or indicators, and that is not true, as every system will have drawdowns, and the size of the drawdown will be determined by the market selection and timing strategies used - garbage in garbage out!
For example, I believe we are now approaching a level on the Dow for a low risk short, but, as with any trade I must be willing to take on the risk for potential reward, and, how much risk is my personal choice. If I short now, or buy puts, my chances of getting it right are not as good as if another market was at it's resistance level, so, even though my "system" tells me to trade, my odds might be reduced, so instead of rushing in now, at first sight of a potential reversal, I might be better off to wait for confirmation and then take on the risk, but that could mean missing a nice little bit of the first move down. If I am wrong I lose a small bit compared to larger potential reward.
There is no magic, it is all about risk control and timing, and the better you get at both the quicker one will start to make money - but remember, and I really mean this...
"the only thing I know, is that I really know nothing"
J_S
