All stock trading and investing methods must deal with the inevitable drawdown from the most recent peak in one's stock trading curve to a bottom before reversing and making a new high. Seasoned systems traders are well familiar with the drawdown phenomenon and the importance of drawdown as a percentage of annual average returns in evaluating a trading system. On the other hand, many "investors" that follow a "buy, hold and hope" approach to the markets for the long term, don't think in terms of a drawdown when their portfolios drop in value by 10%, 20%?75%, as has happened in the past few years. But what they have experienced is an stock trading curve drawdown.
Systems traders know that if they are following a "good" system that gives them a winning edge, in order to "cash in" on what that system has to offer, they must have a strong commitment to following each and every trade recommendation, even if the system is currently experiencing a drawdown. They are emotionally and financially prepared to do so because they already know the historical maximum drawdown that the system has incurred before making new stock trading highs. They also know that the worst time to abandon a system is just after a drawdown and just before, it surges to new highs.
"Buy, hold, and hope" investors, on the other hand, are committed to holding no matter what. But that commitment is misplaced, because "buy, hold, and hope" is not a winning methodology. Commitment without a "good" system, or a "good" system without commitment, is both recipes for failure.
You need two things to win in stock trading. A "good" system or methodology and the commitment to follow it without fail especially through the inevitable drawdown periods.
If you would like to learn more about stock trading and you have a computer and a burning desire to seize success, then you have what it takes to personally
unearth Bill's Astonishing, step by step trading secrets... BUT ONLY FOR A LIMITED TIME. stock trading
The big bad bear is stirring again. So far he... Read More
Robert Rodriguez likes to buy stocks at their lows. When... Read More
Mutual funds were moderately successful in creating a presence in... Read More
For the last few weeks we have seen the stock... Read More
Look back over the years and try to remember how... Read More
Quick, look out the window. It's raining. No, the sun's... Read More
Fundamental analysis.Fundamentals analysis says the best way to predict the... Read More
This is the continuing story of our two imaginary traders,... Read More
Picture one of those clubs where only the real heavyweights... Read More
With all the bad news that has been dumped upon... Read More
Even if you don't own any of their stock or... Read More
Many people would like to diversify their portfolios to expand... Read More
If you are fed up with early redemption charges and... Read More
Very few people, even professionals, have heard of the Dalbar... Read More
How often have you come across an advertisement or e-mail... Read More
One of the great truisms of Wall Street is "Don't... Read More
Investors who exclusively use broadly diversified, no load mutual funds... Read More
In a previously written article, we expanded the use of... Read More
You read and hear a lot about hedge funds. Unfortunately,... Read More
Wall Street has been preaching the doctrine of Buy and... Read More
Today we are inundated with tons of information about the... Read More
For the year 2000 we have seen hundreds of mutual... Read More
Minority Report the movie may not be far off if... Read More
A stock market index is a statistical measure of changes... Read More
There is a famous cliff on the ocean in Acapulco... Read More
O'Hare Chicago prom limo ..You have a lock on your house. You have a... Read More
In a previously written article, we expanded the use of... Read More
Who are the successful investors?There are those who follow the... Read More
Mutual funds and brokers are always preaching not to buy... Read More
(1) Stock Market is Tough Place to Make Any Money... Read More
The debate rages all over Eastern and Central Europe, in... Read More
Much like the middle child, mid-cap stocks have long struggled... Read More
I am taking the time to help others learn the... Read More
A 'stock option' is a contract between two parties giving... Read More
The thinking process of the brain relating to the... Read More
Everyone who follows the financial news has heard of mutual... Read More
There are many good penny stock investments available, which could... Read More
I love roller coasters. The steeper the better. High and... Read More
Are you paying any attention to your retirement savings? Do... Read More
The basis of diminishing return discussions surround such simple notions;... Read More
Every broker and financial planner will tell you that you... Read More
The date October 13, 2000 will forever be embedded in... Read More
One of the main reasons many of us get into... Read More
I go to the Money Show every year to visit... Read More
THERE'S SOMETHING TO BE SAID FOR standing firm in the... Read More
If you were to find that you had some severe... Read More
The Dow Theorycharles h. dowcharles h.... Read More
One of the great "secrets" of successful people is discipline... Read More
The spring-loaded rat catcher is the ultimate low-tech device invented... Read More
People are always asking me when should I sell my... Read More
Stocks & Mutual Fund |