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> From: Robert Norris III <robnshell@xxxxxxxxxxxxxx>
> To: BrentinUtahsDixie <brente@xxxxxxxxxxxx>; Real Traders Forum
<realtraders@xxxxxxxxxxxx>; Group, Real Traders 2000
<Realtraders@xxxxxxxxxxxxx>
> Subject: Re: Exits? - or the Duck
> Date: Wednesday, July 28, 1999 6:39 PM
>
> This thread caused me think back to an earlier time in my life. I used
to
> go around and low ball people that were selling their own personal used
> cars. I would look for the ones that were of good quality but hadn't
been
> taken care of. I would spend a full Satuday detailing them, and then
sell
> them for anywhere between $500 and $3000 more than I paid for them.
>
> I always believed that I made my money when I got the car at the low
price.
> If I knew I had paid a low price I didn't worry about how much I would
make.
> I could set my price (within reason of course). And just wait for the
right
> buyer to come along.
>
> Fewer times I could tell in the first week that not many people liked the
> car that I had for sale. And for that reason it was time to move it.
Sell
> it for whatever I can get. Try to make a little bit, but sell it quick.
>
> Just my analogy. You can't ever sell for a profit if you are always the
> highest bidder.
There are some problems with your analogy.
1. The maximum loss you could incur on your cars was the cost of purchase.
The maximum loss on the futures contract is many
times your original "cost".
2. Low is a great deal harder, if not impossible, to define for futures.
3. The market for futures is more continuous than it is for cars. You
don't have to sell to the first buyer.
4. A quick profit in the futures market means that you must also be
prepared to take quick losses which means that your trading
costs will be high and that you must have many more winners than losers.
A quick profit means that you will miss large moves such as the one that
just occurred in the S&P. You need the large moves to cover the small
losses and provide your profit margin.
Regards,
Mike
--
Aboard 35' Edel Cat "Moongate" in New Bern, NC
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