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Wednesday, July 04, 2018 12:20:30 PM
Simple is great if it fulfills the above criteria. The whole idea is to not sustain losses and when that fails minimize them.
IMO what an investor should never do is let a small loss turn into a big loss.
A 10% loss requires an 11% gain to offset.
20% loss requires 25% gain
30% loss requires 43% gain
40% loss requires 67% gain
50% loss requires 100% in gains
60% needs 150% gain.....and it just gets worse.
So much better to get out and buy lower if it is still worth the risk than to ride something down.
Giving up gains or sticking with a losing trade based on emotion will most often end up a financial disaster. Greed and fear are the two most difficult emotions a trader must conquer. Structure and rules (even simple ones) are what creates safety, profitability and repeatability.
Conclusion: you don't have to understand someone else's system, however you do need to understand your own system and it's strengths and weaknesses.
Sendme is correct in that selling is more difficult than buying.
Green Trades.
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