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Herman,
I just voted. You are correct. Just MM will not do. I did mention
other things which are just as needed, but did not mention
everything. For the sake of completion, here is a short list:
Pitfall #1. Betting the farm. Let's be realistic. Not every trade is
going to be a winner. Here is a simple rule for you to remember.
Never risk more than 50% of your account equity for your total
active portfolio positions including new positions assuming that
your Portfolio Reward Risk Ratio (PRRR) is greater than 10.0 and the
%wins of your system is atleast 50%. When I was trading in Chicago I
heard for the first time about the "RIO TRADE". Simply put, you take
a huge position in the market. If it works out, you are a hero and
rich. If you lose, you leave home and head for Brazil never to be
heard from again. Remember, NEVER BET THE FARM ON ANY ONE POSITION.
Pitfall #2. Planting too few seeds. This one goes hand in hand with
the first pitfall. The key here is diversification and following
several markets. I watch for over 200 markets and look for profit
opportunities in each one as they occur. PLANT MORE SEEDS AND YOU
CAN ENJOY MORE WINNERS.
Pitfall #3. Jumping the gun. Patience, patience, patience. This is
perhaps one of the toughest things for traders to remember,
particularly after they have taken some good money out of the
market. JUMPING INTO A MARKET BEFORE ALL INDICATORS ARE POSITIVE CAN
CAUSE UNNECESSARY LOSSES.
Pitfall #4. The hope trap. This is one of those pitfalls that goes
completely against human nature and it is the biggest account
killer. What I am talking about is hanging onto a losing position in
the desperate hope that it will turn around. A SIMPLE SOLUTION IS TO
ALWAYS PLACE A STOP ON EVERY MARKET POSITION AND DO NOT CANCEL IT!
Pitfall 5. Leaving the barn door open. Don't let your profit
evaporate. Once you are in a profit situation continue to move your
protective stop to lock in a profit. STOPS ARE IMPORTANT TO BOTH
PROTECT INVESTMENT CAPITAL AND LOCK IN PROFITS.
rgds, Pal
--- In amibroker@xxxxxxxxxxxxxxx, "Herman van den Bergen"
<psytek@xxxx> wrote:
> Hello Pal,
>
> hope you took part in the poll at
> http://finance.groups.yahoo.com/group/amibroker/polls on Realistic
profit
> targets for mechanical design, your accomplishments may be an
inspiration
> for others. Thanks.
>
> As some people know MM is my favorite controversial topic: i am a
MM skeptic
> and think it is an over-blown topic for the small trader. I just
don't
> believe that with MM "only" you can make 100%/month. To apply any
type of MM
> and make money you must first have a trading system. I think many
small
> traders may be losing money because they are made to think that
money
> management will compensate for flaws in their trading system
design. All the
> hoopla of turning a Random trading system into a profitable one
with MM,
> just doesn't ring it with me. All it does it limit your losses, so
it hurts
> a little less :-) also, MM may incline traders to trade a system
> prematurely, before it is completed, any excuse to get into the
market and
> place that trade is welcomed by those anxious to prove their
skills to
> themselves or others.
>
> The above is not meant in disrespect of your accomplishments, I am
sure you
> are in control, but not everybody is...
> best regards,
> herman.
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