One thought to avoid as a trader

Jul 7th, 2017 | By | Category: General Comments
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I stumbled upon an important article for traders from this tweet from my friend Sean McLaughlin:

I found this passage from the article particularly important to us as traders:

The vast majority of arguments on social media could be avoided if both sides simply declared at the outset what their timeframe is. You mean we could have diametrically opposed views and yet both make money? Yes, that’s right.

As a day trader I might buy an intraday breakout from a short term short trader covering a failed double top short intraday trade (that works for this trader over time but not this time) and sell my position into a sharp upmove to a longer term investor.  Thereafter, the stock may drop quickly, where I might rebuy it from a mutual fund rebalancing their book.  And then sell my buy higher to a swing trading short seller, watching 60m and daily charts.

In all of these scenarios, I might be winning and those on the other side of the trade may be winning.  We all have different ways we are expressing our edge in markets.

More closer to home for trader, often a developing trader will lament watching a stock finish higher than their sale price.  Okay often experienced traders do this as well.

I just do not get what they are carping about.  This makes no sense to me.

I think of trades as having an exit system and entry system.  Your trade’s risk/reward is good at certain prices and time and not at others.  When you find that price and time where the risk/reward is no longer there, then you exit.

Who cares where the stock goes after?

Who cares!

What does that have to do with your trade?

You made your trade.  You took your profits or loss.  You put on the risk with a trade that makes sense to you.

That is the essence of trading.

Not where a stock went after you completed a good trade for your trading system.  That has as much relevance to your trade as what you are gonna eat for dinner.

Trade the trade.

Trade the trade based on your system.  One that works best for you and highlight your cognitive and emotional strengths.

The rest, as far as I am concerned, is gossip.

*no relevant positions

 

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