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I'm of the opinion that there is actually a TRADING SECRET used by the best
traders in the world. I think they all share a common....uncanny ability. They
don't feel secure about there ability to complete winning trades. They don't
really know how to make money. Their ability is their superb ability to NOT
LOSE money. I firmly believe their ability is analyzing the risk reward of any
trade. They don't know how to get rich..THEY DO KNOW HOW NOT TO GET POOR. A
huge difference.
Peter Lynch has it.
George Soros has it.
Warren Buffet has it.
I could go on
I am yet to meet aa world class trader who was really ever made a trade that
they couldn't justify as an excellent risk reward.
The mistake commonly made by "less than world class" traders is they measure
risk with a naive view of possible loss based on a stop. It astounds me how
many traders repeatedly enter into trades with a risk/reward based on a stop as
opposed to some "series of expected outcomes."
RAY RAFFURTY wrote:
> -----Original Message-----
> From: Michael <comdytrd@xxxxxxxxxxxxx>
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Date: Friday, July 31, 1998 10:56 AM
> Subject: Re: FUT:Today's Bond Trade
>
> >Options - By Paul Forchione for July 31, 1998
> >FNet Mentor http://www.futures.net/trading/full-bio-paul.html
> >
> > Do you know the best kept secret in the trading community? It's that
> THERE IS NO secret. >Believing there are people who can regularly "outsmart"
> the market is a lie that reaches into every >corner. Everyone's entitled to
> their guesses and opinions about what the markets are going to do, but
> >these prognostications should be accepted for what they are -- guesses and
> opinions. Experienced >traders operate under the premise that there is no
> substitute for risk control and money management.
> > These are big subjects and indispensable elements of a well constructed
> trading plan. But that's >like telling someone the key to health and
> longevity is eating a balanced diet and exercising. It's not >"sexy" and
> it's obvious, so no one wants to hear it. Instead, everyone wants an
> esoteric explanation, a >secret that "strikes their fancy" and that's known
> only by a select few. There's no changing human >nature, but as traders we
> should strive to implement a trading plan with components that serve us well
> >as opposed to searching for secrets that don't exist.
>
> Well said Michael,
>
> I think a lot of people, including my self, lack self-confidence
> when the first start out. This makes them especially vulnerable to
> deceptively worded adds designed to play on our greed, fears, and desire to
> succeed. So we bite and plunk down $_____.00 (fill in the blank yourself).
> Of course we need a 400 mh. computer with 128k ram and a real time satellite
> down link with 100 bazillion data points per second to go with it. We load
> everything up and make some trades. Maybe we make some money but more
> likely we lose.
>
> Sometimes, if we are lucky, a funny thing happens. While we are
> waiting for the next shure-fired, guaranteed-to-make-millions signal we set
> up a simple indicator or two (you know, just to test them against the
> megabuck system). Maybe just a 9 period EMA on a 5 min. chart and MACD
> lines. We aren't really paying much attention because the megabuck system
> hasn't fired. Maybe we notice that the EMA has turned down and the MACD
> lines just crossed. But, it can't mean much because megabucks is still
> neutral, so we check our e-mail (from RT's). Later checking the chart we
> notice the EMA line has become very steeply down as have the MACD lines and
> they have gotten pretty far apart, Wow the market's really down too. "I
> wonder if I could trade this", so we start to watch it. Shure enough the
> lines start to flatten and we notice the down trend has slowed. Now we're
> hooked. In a few minuets the MACD lines cross the opposite way and the EMA
> is sloping up. We might notice that the point where the market turned is
> near a previous low, "could this be support?" we ask.
>
> Now we're living on the right edge with just a few simple
> indicators for confirmation. "Could this be what the guys on RT's meant by
> price being the only real time indicator?" we ask.
>
> Good luck and good trading,
> Ray Raffurty
>
> P.S. We forgot all about Mega-bucks, it never worked worth a damn anyway.
>
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