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Bob,
Thanks for the well thought out and well written reply. I'm not sure if
these super traders are very selective in their trades in terms of numbers
meaning that they may "test" the markets that they envision to have a good
risk reward over some "series of expected outcomes" frequently, but that is
only a guess because I don't know. The only trade that I can think of in
recent times that we all got wind of was the silver trade by Warren Buffet
and we have very few actual facts about that. Anyway thanks to all who
contribute to this thread.
Brent
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> From: Bob Hunt <RHunt.066@xxxxxxxxxxxxxxxx>
> To: brente@xxxxxxxxxxxx; RealTraders Discussion Group
<realtraders@xxxxxxxxxxxxxx>
> Subject: Re: Gen: Help understand statment.
> Date: Friday, August 07, 1998 8:47 AM
>
> I thought the good doctor's post was an excellent one. Very succinct!
> And in it he makes a couple of very good points.
>
> The first being that an experienced trader is above all, very
> selective in their trades. They don't take every one that comes along,
> but only those which have the kind of risk/reward characteristics that
> really put the odds in their favor.
>
> Secondly, he emphasizes the importance of considering what kind of
> NEGATIVE developments might occur to ones position. But, those
> considerations should be made in terms being prepared rather than
> being scared. It is a conscious effort to stay aware (but not afraid)
> of what MIGHT happen, and your course of action should it occur.
>
> I think the more inexperienced trader does their analysis, takes a
> position based on the perceived risk/reward characteristics based on
> that analysis, and then cross their fingers in hopes that their
> analysis was a correct one. This simplistic sequence typically leads
> to the trader filtering out the bulk of market information that does
> not support their position in favor of coloring every new piece of
> information in terms which support the position.
>
> The more experienced trader realizes that their analysis just MIGHT
> have huge faults to it, that in an endeavor like trading, where
> certitude just doesn't exist and a 50-60% success rate is doing very
> good, one must have contingency plans. What kind of market
> developments might unfold and what will you do about it? What kind of
> behavior does the market need to exhibit to prove your original
> analysis wrong and what will you do about it? What does the market
> need to do to convince you to reverse your position? All these
> questions should be answered even before the trade is initiated.
>
> To sum it up in a single sentence;
> Successful traders are VERY selective and VERY prepared.
>
> Bob Hunt
>
> ----------------------------------------------
>
> 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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