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I have read so many posts about traders and their
search for success. It seems that very few them have taken the
time to really analyze what they are doing, where they want to go or how they
plan to get there. It is always about the next trade, if they win ecstacy
and if they lost depression. The drive for instant gratification.
There is no plan and no perpective of what they are really trying to accomplish
or how to do it.
Here is an example. The chart is of
Ford. One of this years great turkeys if you look at from a general
standpoint. If you look at from a business standpoint it is an entirely
different matter. If you look at from a traders standpoint it is a gold
mine. How much would your account have risen if you would have shorted it
at $39 and road it down? That is exactly the wrong attitude for a
trader.
You will see on the chart two red arrows. The
low, the high and between those arrows an entry price and two price
objectives. The low was on 1/22 and the high was on 1/29.
If you entered at the entry price and exited at the second target you made a
whopping 83 cents. Not really worth looking at most would say.
Let us analyze that 7 day move in a different way.
Using the rule of 72 and roughly a 14 % move it
would take about 5 years to double your money. Now consider that it
happened in 7 days. So if you could make this paultry sum every 7 days and
then at the end of one month you would have doubled your money.
How many of you doubled your account in the past
month?
Just one trader's opinion.
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