My take on a decent article…

http://blog.currensee.com/2010/08/five-observations-from-wealthy-traders/

Check this out…then read my commentary below.  I also left this for the author, but it hasn’t been approved yet to go in the comment section.  I want to elaborate on a few of these points so I think I’ll take #4 and #5 and break them down into 2 separate posts.  As for #’s 1, 2, and 3, see below.

Nice article, just some thoughts I’d like to share if you don’t mind. Points 1, 2 and 3 are contradicting. I agree with point 1, but subsequently don’t agree with 2 and 3. I have several ideas I would like to discuss – which I will do over at my blog for any of those interested in reading my ramblings.

#1 is important, don’t trade until you understand this. Otherwise, you might as well play Russian Roulette with 5 rounds instead of one, this is how bad you will get burned…

#2 frustrates me as a successful trader. The statement of “They stopped trying to pick tops and bottoms years ago” is a cop-out for not putting your reputation and money where your expertise as a trader is. Now, I may have stopped picking the exact bottom or top but I do pick an area where there is a better statistical chance it will either go up or down. When you stop picking areas where the market is going to turn or stall, you stop trading effectively. How do you make money in real estate? You buy at a discount and add value, wait for an opportunity and sell at a higher price than you paid (hopefully enough to cover the fees and taxes). You bought that real estate at a level that you thought was the lowest it was going to go, not on its way up (and if you did, you secretly picked a top, just one that wasn’t near your purchase price…). Trading is just like the real estate deal, if you don’t buy at a discount (or sell at inflation when shorting) then you are just waiting to go broke. If after the real estate deal the property values keep dropping do you sell it? Or, do you continue to add value waiting for the market to turn because something in your RESEARCH told you that this was a good investment. The trick here is do your homework, cut your teeth on some tough trades and make a trade…if you’re not sure, don’t take the trade. You have to pick up or down, I don’t pick either one until I see a discount (hint – discounts hang out near the areas of tops or bottoms).

#3 is much simpler, if a trader plans his trade as state in #1 then he has allowed for a certain amount of “Win” and a certain amount of “Loss” or drawdown so the statement of “They are patient with winners – and ridiculously impatient with losers” can not be true. They must be patient with their PLAN and let it work itself out in the event of a loss or gain.

Sorry if this got long, but I am going to elaborate more in a place where I don’t feel guilty for wasting space. Thanks!

Advertisements

6 thoughts on “My take on a decent article…

  1. Yeah not favorite post of all time. I am finding myself making comments into post. Why waste longer responses on a post.

    Here is my take.

    #1 I agree with 100% although I think a plan is because it adds confidence, is easier to understand why win/loss, and because it is motivational. Not every time do I know if it is going to be a winner or a loser, but I gain by following the plan.

    #2 Not sure what the point of this was. The biggest traders I know make most of their money on the highs or lows. I am a micro-term opportunists so I do not really care where the market is. But the biggest trader do move the market.

    #3 I hate this observation. No shit. Tell us how you do it. The truth is the best take what is there.

    #4 I trade a few markets but am always looking at other markets. I would rather trade a few setups on many markets than many markets on a few setups. Building the processes now. The reason many only trade a few markets is because of commission.

    #5. I agree with the statement but not the conclusion. I am always assuming I am going to be a bigger trader in a week, month, year. My best and worst days are always ahead of me because of this reason. I believe if you are doing the right things the money will follow. Psychologically this is not completely true. I trade way less because I trade larger. I am trying to hit a goal. I have moments, good or bad, where I am collecting and times where I am protecting.

  2. Pingback: Tweets that mention My take on a decent article… « Begin with the End in Mind -- Topsy.com

  3. Pingback: Trading is simple if there is context. | MyTradingNetwork.com/blog

  4. I noticed you have a number of references to Wayne Jackson (“Jacko”) in your blog. Not sure if you’re aware of this but he’s suspected of running a massive ponzi scheme: http://www.forexfactory.com/showthread.php?p=3944547&highlight=agreement#post3944547

    Has stopped returning investors/mentors emails, has “misplaced” some withdrawals from his fund, offices are really a drop-box, someone dug up an agreement where he basically guarantees a 30% return per year. Some people have apparently lost close to 6-figures (which in itself is ridiculous for people to lose that kind of money to a guy they have never even met…I wonder if they lost money to that nice Nigerian man who kept emailing…).

    Anyway, I’ve never read your blog, but I just thought you should know…

  5. Wow, thanks for the update. I thought he had dropped off the face of the earth, fortunately, I never invested a dime with him personally. I did, however, trade his method for a short period and, while effective, did not allow me to get the most out of the market. I do still use some of his ideas (his method wasn’t fraudulent, just his actions with other peoples money) in my method, but not many. In any case, I hope they catch him and send him to jail if he is guilty – it’s people like him that give us, honest traders a bad name. Thanks! Also, you should check out my blog, it’s packed full of fun trading stuff!

  6. Pingback: Trading is simple if there is context. | traderhabits.com

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s