Hi All

My apologies for missing the blog on Friday - Internet woes. The blog will be back to normal on Wednesday.

An episode in Mumbai serves as the basis for this blog.

  • The first was the comment by a local educator that in ‘day-trading, stops are for losers’. Hmm…I could see what he was getting at but I think that the advice is poor advice for the newbie.

In my approach to the markets, I ALWAYS have a hard-stop in the market. It can be a long way away from the current levels and is placed at a level beyond which I am not prepared to lose any more money. In addition to the hard stop, I have time and structural stops. Over 90% of my trades, I exit a position before the hard stop is hit.

That being the case, why do I say that the advice is poor? Because the newbie faces two problems:

  1. Most newbies are unable to execute mental stops and mental exit strategies.
  2. If the market suddenly moves dramatically against the position, newbies freeze.

Hence, my objection to the advice.

Refer this blog post to a friend or colleague…
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