I have been away for a while and now catching up on posts. I see what you were referring to. Since your post was addressed to me, I did not understand the proper context in relationship to a previous post made by DRRISK. It did seem uncharacteristic of you to make the comment I thought you were making about this style of trading. That is why I was questioning your post that appeared to be supportive of the SOES style "in and out" trading by newbies.
Particularily in the current market, there are many people going blindly into the stock market as traders. New technology for many is just a more efficient means to losses, and at the same time gives them a false sense of "control" and security. Unfortunately, the combination of real-time quotes and an immediate electronic execution system allows them to "act out" their impulses where despite their rationalizations they are actually thinking that they have the "gift" for trading. In this context, scalping for some can be a slow means to a sure financial death with an 1/8 loss here and a 1/4 loss there because they are not focusing on their equity curve. They remember the wins over the losses much more easily with this approach to trading. If they have initial success in their trades in the market, quite frequently this will facilitate a more predictable end for them by promotng their illusions through positive reinforcement. This self-desctructive approach, which I see is an approach used by many newbies to trading in the markets, is what I take issue with and attempt to help people reflect on. SOES houses have littered Wall Street with the "bodies" of many, many traders who have lost and kept losing until they lost much more than they had to lose. SOES houses enourage this quick "in and out" mentality to trading. It is to their benefit and their owners are the ones to walk away with the "profits". So scalping like the SOES style of trading is not for everybody, and I daresay is not for most people. Unfortunately, in my attempt at helping newcomers reflect on this, the listening is only there when it is too late and they have already become a statistic. The pursuit of money can successfully play on a person's brain and their sense of self-worth, and by doing this facilitate their eventual destruction, as well as any addictive drug can. But playing the stock market, which is a drug that facilitates self-desctruction to many, is legal and does not require a prescription to take. All a person needs is money to lose. Even a credit card can do.
Apologies to DRRISK for using posts from him as an example of what I was attempting to communicate to irby. In doing so, I did at times attempt to take what he was sayingin his posts and draw strong conclusions in my attempt to illustrate my point to irby. In this sense, I was actually referring to the many inexperienced players I do see moving into the markets and fashioned DRRISK's posts into a more of a stereo type of this kind of market player that I was making the subject of my remarks. Having said this, I must say that the posts of DRRISK on this topic of trading with real-time quotes in conjunction with the use of an electronic execution system did remind me of this type of inexperienced player in the markets. Now it is a seperate but related issue to conclude that this "image" I have seen of him does accurately portray DRRISK and his current approach to the markets. I will leave this for him to decide.
Moving onto another topic, has anyone noticed an unusually high degree of speculation at the outset of this market rally? The Mid Caps and the Small Caps have been seeing more activity than the large cap issues at the outset of this rally. Examples can be found of stocks that demostrate this speculative zeal where there are some popular stocks have already appreciated over 30% since the beginning of this year. Now I hear that many fundamentally aware market players are continuing to motivate their own purchases by acting on the comapny's anticipated earnings of the *next* year since this year has already been priced into the stock. The capacity to rationalize by the individual in their pursuit of money in the stock market has no bounds. I think this stage of the market is best played in the short term. IMO I agree with Warren Buffet that this is no market for the longer term fundamentally oriented investor.
Bob G. |
