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Strategies & Market Trends : LindyBill's Ballroom -- Ignore unavailable to you. Want to Upgrade?

To: LindyBill who wrote (37)	9/30/2001 10:38:45 AM
From: Mathemagician	Read Replies (1) \| Respond to of 248

You know, Math, you and I seem to be "apples and oranges" on how to play this market, and, I think we analyze it, we will find out why. Judging by your reasons cited below, I would say that the main difference can be summed up as follows: You are day-trading the long-term trend, looking for down days in a bear market, and I am trading the intermediate trend, trying to catch an intermediate correction that may last from a few days to a couple weeks. Sound about right? To me the real contrast lies not the direction of any particular call (as you point out, that's why we have a market), but in our methodology AFTER we make a call. For example, suppose we were both trying to catch SEBL going from 14 to 11 (the numbers are easier). Your position (as far as I can tell) would include shorting SEBL at 14 with a stop at 11. Mine would require resistance and an initial stop somewhere around 14. As SEBL moved past 12 I would enter a stop at about 13.25 to lock in a small profit after tax & txns. As SEBL moved below 11 my stop would drop to 12.5, depending on the strength of the support/resistance at 11. A further drop would be allowed to run but followed with stops. Now that's apples and oranges! By defining a plan and keeping rigid stops, my level of anxiety and danger of acting irrationally based on emotion are almost nil. That's because I decide beforehand when the market proves me wrong. Also my objectively measurable worst case scenario is that I lose $1 per share, ensuring that I am ready to trade again tomorrow. Combining this sort of risk management with appropriate cash management I can be wrong more often than I am right and still be profitable. Just as important, I can be wrong several times in a row before seriously impacting my capital. The above paragraph is essentially the reason I am so uneasy about your methods. You need only be wrong once to really get hurt. If the market rallies and SEBL ran to 25 in a couple of days I absorb a $1 loss while you are exposed to an $11 loss (more?) and all the associated anxiety. dM

To: LindyBill who wrote (37)	9/30/2001 11:52:27 AM
From: OZ	Read Replies (2) \| Respond to of 248

The "Spread" Friday on SEBL was 97 cents What do you mean by that? Surely not the bid/ask spread. Oz