Hi Apakhabar!
Glad to talk to you again, enjoyed our conversation in Anaheim. It's great to be able to put the face next to nick :)
You mentioned overtrading... I did want to voice some thoughts on this matter for a while.
Overtrading is usually regarded as negative behavior with no distinctions. Some are needed I think. The problem is, some try to assign to certain amount of trades the label "normal trading", calling everything above that "overtrading". I often hear something like "Make 3 - 5 perfectly selected trades a day, more than that would be overtrading". This is where I cannot agree. Even 1 trade a day could be too 1 too many, and even 50 could be OK. Amount doesn't matter, IMO. What does? Here is what:
Trader opens more positions at the same time than he is able to observe - this is overtrading.
Trader takes the trades on impulse, on tip, on crowd excitment - even single trade is overtrading.
Proven tested system generates signals - no matter how many of them trader takes it's NOT overtrading. As long as he is able to control his positions, taking each signal generated by the system is the way to go, no matter how many of them is generated. The reason for this is: system is built on certain odds. It assumes that certain percentage of the signals will be successful. Not all of them, it can't happen. If a trader starts selecting which signal to take and which to ignore he ruins the odds built into system. He applies his personal perception which might change any day or minute depending on the mood, on amount of the liquor consumed yesterday, on the weather, you name it. He tries to outguess the system. System is to follow, not to second guess. It's intended to generate signals without emotions. In order to let the system work trader has to take as many signals as system generates. If it's too many, well, may be criteria should be refined. But to say that taking 15 trades is overtrading by the very fact that 15 is more than some amount (3 or 5 or 7) - nah, can't agree.
And no, I am not a secret agent of brokerages sent to encourage more trades incurring more commissions :)
Vadym |
