The concept of "hobby trading" as gambling is an interesting one. I would appreciate your comments on the following example:
- I run a scan at night and identify a chart which looks on the verge of a breakout from a pennant formation.
- The next day I watch the stock, focusing on time and sales, trade rate, big blocks of shares vs. small, etc.
- When I see the stock break out of the pennant formation and I like what I see in time and sales, I buy the stock.
- Within 15 minutes, I will scratch the trade if I am wrong, or, if I am right, I will let my profits run with a trailing stop.
Lets assume the gambling premise is correct, and all the work I did prior to my entry point was a waste of time. Therefore, my chance of success would be no greater than 50%, similar to betting red or black on a roulette wheel.
Hasn't the money management technique of cutting losses quickly and letting profits run given me a greater chance of success than casino gambling, where each bet is either 100% win or lose? |
