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Someone who shall remain nameless tossed out this gem for serious
consideration (watch the line wrap):
> Is exiting a portion of your trade before your profit target is
> hit a viable strategy?
(watch the line wrap)
http://www.traders.com/Documentation/FEEDbk_docs/Abstracts_new/Passam
onte/Passamonte.html
The guy who wrote this is a real kick. ^^_^^ First, he begins his
article with an invocation to the sanctity of mathematics, which I
don't really have a problem with. But then he proceeds to set up a
straw man using statistics, which Mark Twain had a commentary on
something to the superlative of 'damned lies'.
(If you have never read "Letters From The Earth" [Mark Twain], you
are missing one of the great satirical writings in the English
language. I don't literally ROTFLOL very often, but I did many
times when reading that book.)
The whole *point* of taking something off the table before some
profit target is hit seems to be beyond this self-
proclaimed "professional trader" who (I paraphrase) doesn't bother
with a "few points" on the S&P, but who holds out for 5 to 10 points
or more on every trade.
I'm impressed . . . ^^_^^ No, really! ^^_^^ I love taking the
other side of the trade against people who know where the market is
headed before it arrives there, and who aren't going to take
any "nonsenese" from the market if it happens to disagree.
But this God's gift to trading doesn't even seem to understand that
one RAISES THE STOP when one takes a partial profit on a position.
The whole point, the only point, and the point that counts is:
DEFENSE. That is why one takes partial profits. One does not do it
attempting to maximize profits, but to protect capital.
Maximization of profit is wonderful. Hey, I'm all for it. But only
AFTER the defense is set up. Before that, the whole idea is
balderdash and hooey gooey poppycock. Perhaps someone else has
better and more modern adjectives. My English is dated. In any
case, defense first, and anyone who doesn't play that way is dead
meat in this business.
But the silly little argument with charts in that article has
someone taking a profit, then leaving the stop below breakeven.
Duh! Gee, I wonder why the math works out like that? *_*
Sorry, but I just couldn't let that little bit of 3-card Monty go
without a challenge.
Yuki
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