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I found your message with very valid points and I hope
it will be taken to heart by all who read it.
Debra Ann
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--- Begin Message ---
To: Metastockusers@xxxxxxxxxxxxxxx
Subject: Re: [Metastockusers] EXPLORER
From: richandellen <richandellen@xxxxxxxxxxx>
Date: Mon, 14 Apr 2003 19:08:42 -0400
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References: <AGEIJFMMEOODKIMCKCNGKEIACOAA.uhehs@xxxxxxxx><003901c302c3$eddedd70$15d22e44@xxxx><008c01c302cc$7fe3df10$7e08e540@xxxxxxxxxxxxxx>
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You have provided a much more detailed response
than I have to uhehs and I must say I agree 100% right down to
support/resistance.
<BLOCKQUOTE
>
----- Original Message -----
<DIV
>From:
nikku
To: <A
title=Metastockusers@xxxxxxxxxxxxxxx
href="">Metastockusers@xxxxxxxxxxxxxxx
Sent: Monday, April 14, 2003 5:26
PM
Subject: Re: [Metastockusers]
EXPLORER
hello uhehs
I rarely respond to posts like yours but I felt I
had to tell you - IMHO, you should take a few weeks and rethink your trading
plan. A 70/30 win ratio is so improbable that it is a bad idea to base your
plans around it. If you are just starting out, you should be very happy if you
are breaking even after 6 months of active trading. I am not saying that 70/30
is impossible, it is just very very unlikely. Also, it seems as if you are
counting your profits before placing your first trade. Do you have a clear
understanding of how many people like you and me blow out of the markets
within the first 6 months? The ration is very high - maybe 85/15 or higher.
You should ask yourself the following question - why do almost 9 out of 10
people fail and what am I doing to make sure that it doesn't happen to
me? The rules you use to enter trades are far less important than
your ability to stick to a good risk management plan. You seem to be choosing
a plan which involves risking no more than 2.5% of your total equity per trade
(you mentioned a $500 stop loss and it seems you are entering the markets with
a $20,000 stake). This is a little high in my opinion but not too bad. The
first thing you need to do is place a few trades and see how it feels when you
lose - do you stick to your planned risk stops? Do you go chasing your losses
in the next trade and lose again? Or are you very disciplined and are your
entries working out? Keep a diary of all trades and write down everything -
why you entered, how you felt when the position went for or against you, when
you exited and why. Print out all charts pre, intra, and post trade. Keep them
and look back at them often.
You seem to believe that as long as you have a
winning 'system', you will be a winning trader. Nothing could be farther from
the truth. The simple system you are describing is neither winning or
losing - there are 100 different ways to generate entry signals that are just
the same as the system you have described in your first post. Thousands of
people have developed and tried dead simple systems such as this. I have
several indicators that I have developed over the years that
would probably seem to you to be the Holy Grail, because they just seem to
trigger off at the exact moment they should. They are not. The best
'black box' systems are ones that you and I will never ever see; they are not
sold - they have been constructed by dedicated mathematicians who spent years
working on them and are used by those who constructed them or by those who
hired the people who constructed them. I am not saying you can't create
your own - after all, I don't know anything about you!! Perhaps you have what
it takes to spend the thousands of hours necessary to familiarize yourself
with the basics of indicator work and then go on to apply what you know in a
creative manner in order to develop a system that can be the BASIS for
profitable trading. If you did, however, I don't think you would be posting
here. But... THIS SIMPLE SYSTEM MIGHT WORK JUST FINE!! It all depends on your
discipline.
The fact is, judging by your posts, the best
chance you have is to become good at the non-system aspects of trading - the
psychological aspects - and to make sure that you don't make the same mistakes
that have been made by thousands of people just like you who went into the
markets thinking - 'Hey!! This software seems to show winning trades!! I could
make money doing this!!' Seek out people who have won and then seek out people
who have lost and get them to tell you why they had the experience they did.
Write out your rules and then see if you can follow them.
There will be some on this thread who disagree
with my comments - they will say that there is nothing to be scared of and you
have to go for it and see what happens. Others will say that I am too
pessimistic. Still others will say that they have made it just fine without
paying attention to any of the things I have mentioned here. The fact that you
were already calculating how much money you will make is what made me write
this - that is just a very bad idea. Forget about how much money you are going
to make - it is overwhelmingly likely that you will lose what you have - this
is not a matter of opinion, it is a matter of statistics. You should be 100%
focused on how much money you can lose.
The last thing I will say is this - if you feel
that I am trying to discourage you, please understand - nothing could be
farther from the truth. I WANT you to do well, and I DON"T WANT you to make
the same mistakes that have been made by the vast majority of those who have
come before you - this is the only way you can make it. For people like you
and I, the most important thing is to have a good game plan and to stick to
it.
BTW... the most important weapon in my arsenal
is... SUPPORT AND RESISTANCE. My S & R lines serve me better than any one
of the hundreds of custom indicators I have at my disposal. Good Luck - I mean
it. To
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