Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: KM who wrote (8592)	5/28/2000 9:39:00 PM
From: Dan Duchardt	Read Replies (1) \| Respond to of 18137

KM, I remember one of my earliest messages on this thread was arguing for the high win/loss ratio as being essential for being profitable. That was quickly and correctly refuted by TraderAlan who pointed out the virtues of taking larger profits on a smaller percentage of winning trades, while keeping the higher percentage of losses small. Even when I was arguing for the high ratio I recognized that taking profits too quickly was a major weakness of mine. I wanted a high ratio and bigger winners, but I was too afraid to let the winners ride. I loved Duffy's rebuttal to the adage "You can't go broke taking profits". I've often made that counter argument myself, because I have proven it to be true. I have not gone broke yet, but looking back on 1999 and earlier I see enormous loss of opportunity from taking profits too quickly, followed by fear of reentry thinking every top might be the last one. Lost opportunity far outweighs any losses I realized on my losers. I worked hard to change my thinking, and let my profits ride. About the time I started getting really comfortable with that, March rolled around. Since much of what I have to work with is restricted to cash accounts, profits only come on the long side and tend to be swing trades. That was fine in 1999, but not so fine now. I'm still kicking myself for not selling all my LU at 75 when I had the chance, though I did unload the rest at about 65 and have since bought a bit back. Now that I'm just coming around to recognizing trades worth riding for bigger profits are on the short side, I'm trying to hold them longer in my little DT account. Unfortunately, the uptick rule makes them a bit tougher to enter, but at least that is an incentive to hold them once you get them. In spite of all the evidence in favor of riding the winners, I do think that the current market is no place to be stretching for bigger gains on either side. The sustained trend we had in late 1999 and early 2000 brought with it the huge intraday, and several day runs, where riding winners was clearly the thing to do, even if only seen in hindsight. Using that environment as a benchmark for what can be achieved by letting winners ride has made a lot of people lose a lot of money, at least on paper if not actually realized. I'm giving the old adage a bit more respect until a clearer trend is established. Dan