Quote from: MatTheCat on March 04, 2014, 02:21:43 AM

Quote from: sgbett on March 04, 2014, 02:11:49 AM

I see your sense of self importance his still intact. Good for you. If reading comprehension fails, then just pretend you know more than everyone else. I've got another great strategy, buy on one site and short on another you can't lose! Roll Eyes

Turns out you can lose. Some whale can come to market and send the market in the complete opposite direction of what it was heading in the most spectacular fashion. My short got margin called. A $666.67 loss I took on that, with all the other fees that the exchange steals from you not included.

Then on the rise, I thought I would be smart and try and trade the tops...turns out it wasn't so smart and I would end up buying back for more than I sold at, so I never tried to trade the $710 top. Now, that would have been smart. Instead, I sold 75% of what I had at $650, fearing a smack down that would wipe out all my profits....turns out, I burned myself again.......I am very bad at trading when the market is so intense. I cant trust any decision that I need to make in the heat of the moment when emotions come into play.

This market is enough to drive anyone to fkn distraction.

I think that is the point. You seem to think you can win, I assume I am going to lose and position myself accordingly. Don't trade to win, trade with consequences in mind. This is my "1 step trading plan".

1. Assume all money you buy with you will lose 100% of, for real, and write it off as sunk cost.

It's all about losses. There are two kinds and only one is important. Paper and real. Paper losses don't matter, only real ones. So you got to make sure never to get real losses. That means never sell underwater. "oh but I can buy back cheaper". yeah sure you can, but you might not.

What you got there is a confirmed defacto real loss. Yes you have some fiat to buy with, and you might get it cheaper, but you might get it more expensive, you are effectively back at square one though, you have some money (less than you started with) and you have to make a decision as to what you are are going to 'lose' it all on next Wink

Paper losses can stay paper losses forever, until it goes to zero and the stock is delisted, its not a real loss. If you recall, in step 1 you already lost it all 'for real' so whilst ever you only have paper loss, you are in a better position. You always have X no of whatever you bought, the price is irrelevant, the price distracts you from accumulating. The price makes you do silly things.

If you have a long position deep underwater, no-one is forcing you to sell - you want to. The market wants you to. You can hodl that bad boy forever. You will never have less of what you bought.

This brings me to shorting. Shorting is stupid, its 100% guaranteed negative EV. Your upside is limited your downside is unlimited, and the relative profit/loss from a short position are exponentially opposed. You have a stock at $1 you are short for a dollar a pip. As the price drops, it gets harder and harder to make $10 more. Day 1 it has to drop 10% to 0.90, Day 2 it has to drop 12.5%, Day 3 14.3% etc. Whereas to lose $10 requires the same 10% on day 1, but the next $10 loss only requires 9.1%, the next $10 8.3% etc

If you short, then there is a chance that you will be forced to sell. If you are forced to sell then you can also state with 100% confidence that you will lose the *most* money you could have possibly lost. The margin call is the darling of all brokers, why would you play right into their hands.

Every decision you make is pretty much 50/50. Everything about the market is designed to make you make the worst choice to tip the odds against you. Don't do what the market wants you to do, do the opposite, and do it a bit at a time, that way the odds should tip your way.

I try to remain indifferent to price action at all times. Everything I feel about the market I try to ignore, until such time as it starts to overwhelm me. That's when I know the market *really* wants me to do something, that's when I know it's time to do the opposite. I then do the opposite, all the time remembering step 1, and knowing full well that its probably 50/50 whether I was right.