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.