Fundamental Trading Positions

[saichuen]

2) There is no rule in trading/investing that I have seen that says that one must recover losses in the same stock(s) that created them in the first place. Why not consider putting the funds you are considering averaging down with into another stock that is at least trending up and with hopefully better fundamentals and outlook. I've seen many people turn originally short term trades into long term 'investments' hoping falling stock prices will recover eventually. Some will, some won't.

of all the reasonings that people may come up on averaging down, this is the one that is perhaps the most sensible decision to take, in terms of money and risk management.

 

[ducati916]

Knobby

I disagree ducat.
If there is a trend down and you cannot understand what it is based on what you have worked out in a fundamental sense then you need to assume you may not know everything. If the trend is based on some short term factor and you are looking long term then what you say will make more sense.

While that may indeed be the case, in reality, it happens very rarely.
If it should occur, then I would have no business taking a position.
Technical trends are meaningless, as they are largely populated by technical traders who are in large part meaningless, due to their reliance on stoplosses.

bullmarket

Regarding your comment that a 50/50 event offers no probabililty of an outcome, I believe that view is totally wrong . Surely even calling heads on a toss of a coin, with its 50/50 possible outcome, gives you a probability of 50% in being right. So even in your case where you believe a trend is a prediction of the future (and in your case only a 50/50 prediction) then you are in effect saying that you still have a 50% probability of predicting the future direction of the trend.

No not really, if we utilize aleatory probability, then yes, 50/50 would count as an outcome. However this is never really the context that traders/investors really use the concept of probability when talking about trends, and that is what is being discussed after all.

When the concept of trend is introduced, probability, goes out the window, as we are now talking in reality within a deterministic context. Determinism is a philosophical proposition that proposes that events, in this case "price action bracketed within the trend" due to being causally determined by an unbroken chain of prior's, thus is predictive of future direction.

In the stock market, probability defined by DETERMINISM is false.
Therefore, if, you define probability as an aleatory construct, then 50/50 is random, and thus makes a total nonsense of "trend" defining anything at all.

jog on
d998

 

[wayneL]

Duc

While that may indeed be the case, in reality, it happens very rarely.
If it should occur, then I would have no business taking a position.
Technical trends are meaningless, as they are largely populated by technical traders who are in large part meaningless, due to their reliance on stoplosses.

Despite being a technical trader, I agree with your points re determinism, probability etc. In fact if you recall I raised this point (albeit from a different angle) on Reef.

Your posts always contain some sort of logic, even if tenuous or faultily constructed because of your emotional bias against t/a-stoplosses etc.

But sorry mate, that quote above is pure :bs:

Your logic is self defeating. If trends are largely populated by tech traders, these selfsame traders can hardly be meaningless now can they? And what have stoplosses to do with a trend?

In actual fact tech traders are mostly meaningless (the only sub-point you jagged here) as trends are largely populated by investors...f/a investors! It is they who create the trend. They are the "THEY" that we tech traders refer to obliquely and ad naseum

This makes the trend extremely meaningfull. TA traders merely exploit this f/a created trend and their only influense is to tidy up around the edges.

Financial market trends are deeply rooted in human psychology and nothing to do with t/a. T/a just plots it on (electronic) graph paper.

Cheers

 

[bullmarket]

no problem ducati

I posted my views on averaging down and the relationship between probability and trends in earlier posts with my supporting reasons.

We obviously disagree and that is fine I don't have a problem with that......each to their own and what works for them as I don't see any value for me in rehashing my views and reasons from earlier posts

cheers

bullmarket

 

[Knobby22]

Pefectly stated Wayne and I completely agree with you.


Ducat, don't get caught up in the psychobabble that surrounds Warrren Buffett. I invest like you. I do OK.

If you are talking about noise then ignore the chart but clear movements mean something, could be insider trading.

I pay some attention to charts though they don't make my decision for me. What you are saying is betraying you as a babe in the woods. Beware the wolf!

Please don't take this badly. You are on the right path. Take our comments in and think about them. What makes a winner is that he/she learns!

 

[It's Snake Pliskin]

Not quite Snake. Dollar cost averaging is when buys occur at regular intervals whether the stock is going down OR up. The price movement is irrelevant

Averaging down only buys additional shares as the shares become """"cheaper"""".

Yes, but I did say I was putting some positive spin on it! Yes it is regular such as 100 units every month regardless of the price.

 

[ducati916]

WayneL

Your posts always contain some sort of logic, even if tenuous or faultily constructed because of your emotional bias against t/a-stoplosses etc.

True, my contempt knows no bounds. My emotional control is nonexistent when the whole concept of technical analysis is raised.

But putting all of that aside for a moment;

We have a chart showing an uptrend, defined by higher highs, and higher lows
So far so good.
Along comes Mr Technical analysis, ahhhhhhh, uptrend, and I shall define my uptrend via, trendline, EMA, PP, Horizontal Support, take your pick.
I shall place my stoploss HERE. I draw my line in the sand. If PRICE trades lower than my line in the sand, ID, EOD, EOW, EOM, I am history.

That stoploss is defined by a squiggly line that means what?
It means absolutely nothing. ZERO.

In reality it is dictated by his RISK MANAGEMENT.
I do not know what I am doing, therefore, I must limit my risk, engendered by my pitiful lack of knowledge, and place a stoploss.

Therefore, by definition, as regards positions in stocks, technical traders are accorded no weighting, as their positions will flip-flop like a dying fish, which resembles a lot of their returns.

Take my favorite example of the moment, GOOG.
http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=2;t=000219

Techies........clueless.

Your logic is self defeating. If trends are largely populated by tech traders, these selfsame traders can hardly be meaningless now can they? And what have stoplosses to do with a trend?

No, we need to sell to someone, and technical analysis is so LAGGING, and the terrible irony is that you think it is the opposite!

In actual fact tech traders are mostly meaningless (the only sub-point you jagged here) as trends are largely populated by investors...f/a investors! It is they who create the trend. They are the "THEY" that we tech traders refer to obliquely and ad naseum

We create SUPPORT, you guys, the late comers provide the trend for us to realize our profits. The trend ends when we sell, and break the trend, and violate all your squiggly lines.

Financial market trends are deeply rooted in human psychology and nothing to do with t/a. T/a just plots it on (electronic) graph paper.

Yes they are (psychology)
TA is just nonsense.

Knobby

Ducat, don't get caught up in the psychobabble that surrounds Warrren Buffett. I invest like you. I do OK.
If you are talking about noise then ignore the chart but clear movements mean something, could be insider trading.
I pay some attention to charts though they don't make my decision for me. What you are saying is betraying you as a babe in the woods. Beware the wolf!
Please don't take this badly. You are on the right path. Take our comments in and think about them. What makes a winner is that he/she learns!

What on earth are you waffling about?

 

[wayneL]

Duc

TA is such a broad church (as is FA ) I find it comical that you have a single set definition of what a technical trader is and what he/she is trying to achieve, and set about lampooning all TA based on the one model. (TA is lagging? ...like FA isn't? AHAHAHAHAHAHAHAHAHAHAHAHAHAHAAH!)

You can bluster and pontificate all you like. But the reality is journeymen TA traders regularly extract attractive returns from the market. The apprentices and pretenders may struggle, but the jouneymen outperform. (FA practitioners experiences are the same )

This much even you cannot deny unless you are seriously deluded.

Your continuous bleating about TA being nonsense, and scarcely veiled personal sleights of practitioners, in the face of all evidence to the contrary, is making me seriously question your ability to logic. I mean it's so simple a concept. Your intellectual need for complexity is blinding you to reality.

Duc, you don't have to look at charts if you don't want to. It's OK, we won't think less of you for that. But it's kind of infantile to argue against reality. We make money. Full stop. Case closed.

It seems you have this intellectual immaturity that must denigrate all other forms of study in order to justify your own. As a society, most of us moved past that soon after The Inquisition.

The TA traders here have resisted in denigrating FA out of the sense of reality I was speaking of, and out of plain good manners.

Now Puleeeze drop the TA bagging, it is getting monotonous, and it drags the forum down to the level of the rubbish forums around.

State your case for FA, by all means, but c'mon.... reasoned logic only.

Cheers

 

[bullmarket]

Hi ducati

I disagree with your comment below.

That stoploss is defined by a squiggly line that means what?
It means absolutely nothing. ZERO.

In reality it is dictated by his RISK MANAGEMENT.
I do not know what I am doing, therefore, I must limit my risk, engendered by my pitiful lack of knowledge, and place a stoploss.

I believe stop losses are a crucial concept that especially short term traders should include in their trading strategies/plan.

I don't believe at all that a stop loss level means nothing. What it means to me is that the trader admits that at the stop loss level his/her expected price action did not eventuate (and no-one will have 100% winning trades) and the likelihood of their expectations occuring within a reasonably short time is low. Hence in order to preserve capital the trader sells out at the stop loss level to look for better opportunities elsewhere. Obviously everyone will hope their stop loss levels are not hit too often.

You're going to be hard pressed to convince me that there are not any very successful and profitable technical analysts out there who use stop losses as part of their strategy. Some of them even go on to write books about it.

How a trader sets his/her stop loss levels is purely up to them according to their objectives and risk tolerances as there is no one-size-fits-all method for setting stop losses

Imo, given that no-one in the long run will have 100% of winning trades the vast majority of traders will most likely experience a large number of small winning trades cancelling out a large number of small losing trades (assuming the use of well set stop losses) with then hopefully a few trades going off on reasonably good profit runs.

Imo Rule #1 in trading is Preserve Your Capital and using stop losses is a good way to do that.

Good luck with your trading/investing

cheers

bullmarket

 

[wayneL]

Hi ducati

I disagree with your comment below.



I believe stop losses are a crucial concept that especially short term traders should include in their trading strategies/plan.

I don't believe at all that a stop loss level means nothing. What it means to me is that the trader admits that at the stop loss level his/her expected price action did not eventuate (and no-one will have 100% winning trades) and the likelihood of their expectations occuring within a reasonably short time is low. Hence in order to preserve capital the trader sells out at the stop loss level to look for better opportunities elsewhere. Obviously everyone will hope their stop loss levels are not hit too often.

You're going to be hard pressed to convince me that there are not any very successful and profitable technical analysts out there who use stop losses as part of their strategy. Some of them even go on to write books about it.

How a trader sets his/her stop loss levels is purely up to them according to their objectives and risk tolerances as there is no one-size-fits-all method for setting stop losses

Imo, given that no-one in the long run will have 100% of winning trades the vast majority of traders will most likely experience a large number of small winning trades cancelling out a large number of small losing trades (assuming the use of well set stop losses) with then hopefully a few trades going off on reasonably good profit runs.

Imo Rule #1 in trading is Preserve Your Capital and using stop losses is a good way to do that.

Good luck with your trading/investing

cheers

bullmarket

Yes, well reasoned comments Bullmarket.

What works....is real!

Cheers

 

[ducati916]

WayneL

TA is such a broad church (as is FA ) I find it comical that you have a single set definition of what a technical trader is and what he/she is trying to achieve, and set about lampooning all TA based on the one model. (TA is lagging? ...like FA isn't? AHAHAHAHAHAHAHAHAHAHAHAHAHAHAAH!)

Technical trading is not really that broad at all.
In fact its rather limited.
It is trading charts, +/- technical indicators, in a variety of timeframes.
Thats it.

Technical analysis is lagging.
No Fundamentals do not lag.

You can bluster and pontificate all you like. But the reality is journeymen TA traders regularly extract attractive returns from the market. The apprentices and pretenders may struggle, but the jouneymen outperform. (FA practitioners experiences are the same )

I have never stated that ALL technical traders lose money.....just most of them.

Your continuous bleating about TA being nonsense, and scarcely veiled personal sleights of practitioners, in the face of all evidence to the contrary, is making me seriously question your ability to logic. I mean it's so simple a concept. Your intellectual need for complexity is blinding you to reality.

What evidence?
Save TechTrader, I have seen ZERO evidence of consistent success.
In point of fact, most of the public systems, methodologies, have either lost money, or returned so little that it was hardly worth the effort.

Duc, you don't have to look at charts if you don't want to. It's OK, we won't think less of you for that. But it's kind of infantile to argue against reality. We make money. Full stop. Case closed.

Thankyou, thats a real relief.
Case closed...................Oh I don't think so.
Apart from tech/a, in Australia, and his TT, I have not seen another (apart from myself) publicly traded series of trades that lasted for any significant period of time. There are many claims, but very little in the way of evidence.

I was tracking a discretionary trader in the UK, who traded via technical analysis, and his results were desultory.

It seems you have this intellectual immaturity that must denigrate all other forms of study in order to justify your own. As a society, most of us moved past that soon after The Inquisition.

Not at all.
I illustrate the flaws that I find in TA, anticipating a reasoned argument that will illustrate the fallacy within my logic. Unfortunately, no evidence, or reasoned argument emerges, just the usual attack on personality, intellect, emotional balance, drug useage, etc, etc. Yours is more of the same.

The TA traders here have resisted in denigrating FA out of the sense of reality I was speaking of, and out of plain good manners.

Nonsense.
They understand so little of Fundamental analysis, they could not even begin to attack it with reasoned argument. What would initially emerge would be the usual brainwashing from authors of technical trading literature.

Now Puleeeze drop the TA bagging, it is getting monotonous, and it drags the forum down to the level of the rubbish forums around.

Absolutely, the minute someone demonstrates the inherent value that resides within technical analysis. I mean, I am outnumbered on this and other forums, everyone wants to make money, yet, apart from all the usual platitudes, no real thinking seems to emerge.

State your case for FA, by all means, but c'mon.... reasoned logic only.

Of course.
jog on
d998

 

[Knobby22]

For the first time ever I have used the ignore button.

 

[wayneL]

Duc

I am allowing you the last word. I have more entertaining things to do than counter every point.

Leave it there.

Fair warning OK?

 

[bullmarket]

Hi ducati

re your comment quoted below:

I have never stated that ALL technical traders lose money.....just most of them.

It's widely accepted that less than 10% of traders are profitable (at least to any significant extent) in the long run, so you are not saying anything new there as far as I can see.

What I and others with similar views have been saying about the plusses or whatever re technical analysis, using stop losses, averaging down being a minus etc etc is simply what the overwhelming majority of the 10% of traders that do succeed in the long run are most likely doing.....nothing more, nothing less

cheers

bullmarket

 

[wayneL]

It should be pointed out, that as recently as January 2004 (and probably even more recently) our Duc was a technical daytrader, posted trades publically and did rather well.

The implications of this, apart from the glaringly obvious, is that here we have a person with less than 2 years experience in fundamental analysis, speaking with all the authority of Peter Lynch or Warren Buffet.

I leave you all to draw your own conclusions.

I think this topic, now well off course should be closed.

Duc,

If you still feel like disclosing your positions, please start another thread, and lets all endeavour to keep that one on track.

Cheers