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A very good book was written on this very topic: How I Lost A Million
Dollars by Brendan Moynihan. Conclusion: successful traders use many
diverse methods but all have one thing in common - they don't let
themselves lose big.
At 10:07 PM 8/5/98 -0600, BrentinUtahsDixie wrote:
>RT's,
>
>A recent post by our fellow member Dr. OEX was interesting to me.
>Especially the last part. I wrote to the Doc and I'm awaiting his reply if
>any until then I would like to ask you for your opinions on what this is
>about and how this applies to world class traders being able to trade more
>successfully then lessor traders. If follows:
>
>Brent
>
>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 a 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."
>
>
>
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