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Strategies & Market Trends : The Market Taught Me That......
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To: BenYeung who wrote (144)11/15/1997 6:26:00 PM
From: Matthew B.  Read Replies (1) of 151
 
A few things that I've learnt at GREAT expense:

(1) If you want to buy and hold - buy a mutual fund. Get one with a good manager who has in his top ten positions stocks that you would want to own. Buy and then forget about the fund. Buy and hold with stocks requires much discipline as you may forget which ones you are trading versus which ones you are holding and so may switch strategies which can mess with your mind.

(2) If you are starting with stocks - start small and experiment. Small positions. Don't depend on any one stock. Diversify but to not to too many positions which you cannot track. Measure your gains, losses, and commissions. If don't perform measurements you will not realise when you are over-trading. You may also not realise that your mutual funds are performing better than you are. You may also loose so much that you will be out of the trading game for a while.

(3) Determine a trading system that you will use and follow it. Improve your system as you go. Determine if you are a momentum player, value, growth/value, or IPO player, etc. Determine the strengths and weekness of the approach you will take. Each strategy requires a different mindset. If you use several at the same time you will be a Jack of all trades and Master of none. You only make money when you are either a Master or you are plain lucky. You will also be a very confused trader.

(4) Entering a position is one thing. Leaving the position is where you make money. Develop a procedure that you follow every night (if you don't trade for a living) where you first check every one of your positions and determine if you shall hold or exit. Once this has been decided, only then should you look for new trading opportunities. With options trading this discipline is a must. The market is volatile, a stock is even more so. If you don't have the discipline to track your trades you may get nasty surprises.

(5) Trading is a mind game. Keep your strategies simple so you will be able to follow them automatically. A confused trader is a losing proposition; you will not know what to do when the time comes.

(6) If you do not trade for a living, successful trading should be boring but financially rewarding. If it is very exciting for you, you may be trading based on your emotions. You may even have feelings of grandure. The rush you get may even lead you to forget about the great job you have that is actually paying for all those losses you are getting.

Matthew
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