It doesn't matter that you're wrong, only how long you stay wrong!!

[Wysiwyg]

Which is the more detrimental to ones trading account ...... Fear or Greed ..... and why?
All in my humble opinion, but take with a grain of salt as I am still working at being "long term" successful

I don't confess to having my brain wired as right as I would like for this game either but to address the fear greed question. I still feel fear of the potential to lose money both in profit and in loss but I don't feel greed. Having neither is better for trading. That being enter on a condition and exit on a condition, not on fear or greed.

 

[So_Cynical]

Just a beginner question - but is this what is referred to as 'discretionary' trading? Or is it closer to "investing" than "trading"?

Not 100% sure what to call it...i do trade as in 'open a position' but have an open ended management strategy that i simply call 'discretionary' i am trading in order to build a 'buy and hold' portfolio that i'm low cost averaging into.

I'm trading to establish free carry that i plan on holding as an investment.

 

[tech/a]

'Run its course' is as objective as 'it smells right'. You have no idea what would have happened had the Fukushima incident not occurred. You are guessing. It would most likely have continued upward in valuation given the continued good announcements. It is back down in the 6s because of continued investor uncertainty, both of the prospects of equity in general (ASX200 continues downward), and the prospects of nuclear power given the reaction of Germany.

I might add to 'it only matters if in aggregate you are right', that 'it only matters if you know why you were right, and were not guessing like a game of roulette'.

Max
You still don't get it

I don't care what the future holds a my trading ( The discretionary trading) is kept skewed to market. In these times I trade short term intraday to a few days.

If my loss is limited to missing a quick upside move due to say Greece striking oil in every back yard--- which I couldn't predict! Then I'm happy.
For me it's minimum risk and maximize reward where possible.
If those interested in the PEN example want to look at the string of my analysis they will find technically I'm coming from.

Your obviously a fundamental trader so understandably your incorrectly assuming I think I picked the up coming tsunami.

Anyway perhaps some technical education may come in handy for you.

 

[ROE]

One of my pet hates is the term "averaging down" which I consider as a nice way to say "I stuffed up by not selling and I am now compounding the mistake".

That should bring a few out of the woodwork.

Cheers
Country Lad

I average down on stocks as well as average up it is a matter of time stock I average up and down it comes good - Most of the time i got it right, occasionally I got it
Wrong but the right one return outstrip 3 to 1

CCP average down from $1.20 and average up once so far at $4.30
CCV average down from 60 and average up at 76 ..recently average down 64c
TGA average up from 1.50 last one 1.87
NVT bought at 1.95 average up 3.80
CAB start 6.20 last average down 4.44
QBE first parcel 16.50 when the time is right i will average down -
FLt average down from $7 to last one $5.00

It been a few years find no reasons to sell any - may get chance to averge down again

there are stock I prime for average down but never ever get there
Cil never trades at price lower than 1.18 i get in now take over target
Fge never trades below 1.30 i got in
Wwa got take over offer

I am start buying another one ready to average down then it jump 5%
i will wait patiently to average down but i am afraid it wont get there
Prime target for future years multi baggers

ps the PEN stock to me speculation at best, gambling at worse

 

[tothemax6]

Max
You still don't get it

Well, I'm going to agree on that one.

 

[Assasin]

I believe the terms averaging down or up should be abandoned.
Everytime I put money into a stock it is to be on it's own merits, and that where the sp is at the time, that I'm banking on it being higher in the near future and beyond. If I have previously purchased at a lower price is just a bonus. Also, to purchase another parcel of the same stock means that you couldn't find another stock with the growth that would deliver what you are anticipating.

On the flip side, to buy a stock under what you have previously bought for, obviously proves you have made an error (i'm putting my hand up here), but to purchase more, could only be done on it's own merits, and that you again are confident that the sp is going to grow from purchase price. Again, it must be said, is there no other prospects out there to put your money into?

To term this as averaging up or down is garbage.

Just my thoughts.
Cheers.

 

[Boggo]

Went to "The PUB" at Mooloolaba for a steak last night.
On the wall there is a sign related to gambling, it says...

"If I hang in long enough I will win it all back"

and underneath that in large bold print...

WANNA BET ?

Relevant to this discussion perhaps ?

 

[tech/a]

Max

A mentor has pointed out that in essence we are on the same page
But with reference to your statement that only profit matters and in line with the essence of the thread title.

You can be right 90% of the time and if wrong long enough for that 10% to blow up your account!

 

[tech/a]

While some have managed to average down and eventually profit,I find averaging down has the serious flaw of not being able to admit your analysis at the time is wrong.

Fundamentalists end to average down more than technical analysts I've noticed.
It appears perceived good value is seen as even better value in a falling stock price.
I've not seen a comment like----the market has this priced at a lower than my current valuation they must at this time be right!

Has Antonella done research on how often a company valued by experts as low actually reaches a higher figure.
Ie buy recommendations-- fundamental ones.
I cant believe they would be better than 50 %

 

[sinner]

Only just spotted this thread, thought I would give a real world example, since So_Cynical already brought it up.

Presenting:

"Quotes from the APN thread"



I shorted this pig several times on the way down for small swings, didn't make the whole 30% decline from $1.8 to $1.3 but got enough of it to make it worthwhile.

Personally, I think it would be pretty hard to come up with a good reason to have held APN from $1.8 down to $1.3. Why not just set a buy stop above resistance if you want in? I can't think of any fundamental reasons either: the first fundamental I check is the debt/equity and interest cover ratios. I only want to short pigs after all. The simple stats show this pig was wearing way too much lipstick even back in 2010.

New traders, what would you have preferred to do?

Hold the stock for a 30% decline? Be flat for a 30% decline? Be short during a 30% decline?

Hint: Only one of those options leads to a 30% potential profit.

I wish So_Cynical and his friends at Orbis Capital the best of luck.

 

[So_Cynical]

I wish So_Cynical and his friends at Orbis Capital the best of luck.

Thanks...i need all the luck i can get, APN the worst (post GFC) performer in my 24 stock portfolio.

Have added this thread to my favourites and will post when the inevitable turn around happens, or when Orbis and my self sell out.

 

[tech/a]

Of the 24 So Cynical how many are averaged down from their original purchase price?

 

[Sean K]

It seems a reasonable statement to make that you should cut losses early when 'trading', and proportionally so for long term investing.

Would be nice to be right more often than not though.

 

[tech/a]

It seems a reasonable statement to make that you should cut losses early when 'trading', and proportionally so for long term investing.

Would be nice to be right more often than not though.

Dont agree Kennas
If your making a LOSS my view is regardless of time frame.Get out of it before it becomes a costly one.
However when it comes to profit then longer timeframes tend to see deeper retracements in open equity as the timeframe is increased.
But never in my view the go from open profit to loss --- worse averaging down after giving back open profit.

 

[sinner]

It seems a reasonable statement to make that you should cut losses early when 'trading', and proportionally so for long term investing.

Would be nice to be right more often than not though.

If you want to be right more often than not then trade a system with a high win rate. On stock indices my win rate is usually 70%, trend following in forex more like 40%.

But when I'm losing 60% of the time in forex it doesn't feel "not nice", it actually feels good to know each loss is bringing me that much closer to my next win.

 

[tech/a]

If you read the MMX thread ( I cantbpaste the link ).
This is another perfect example of this threads topic.

 

[Boggo]

My attitude below to stocks that turn down, tighter than normal stops due to current market and time of FY etc.

I would rather be wrong and lock in profit than wrong and give it all back.

My two best recent performers exited last week, stop trigger levels circled.

(click to expand)

 

[So_Cynical]

Of the 24 So Cynical how many are averaged down from their original purchase price?

Sorry Tech i somehow misssed this when you first posted it..

Out of the 24 current stocks i hold, i have averaged down into 10 of them...now of the 10 stocks i have averaged down into, 4 of them are in profit right now at this low point in the market and another 3 stocks of the 10 are within 15% of break even.

Here's my portfolio % P/L straight outa Stator.
~

 

[sinner]

Thanks...i need all the luck i can get, APN the worst (post GFC) performer in my 24 stock portfolio.

Have added this thread to my favourites and will post when the inevitable turn around happens, or when Orbis and my self sell out.

Other stocks in Europe have been distracting but I just remembered this thread after looking at the APN chart today.

Thought it would be worth checking in with So_Cynical and seeing how apt he thinks the title of the thread is...

Wish I had kept APN on the list of pigs to short...finally starting to look sort of maybe oversold. Time to average down again? I wouldn't bet on it :

 

[So_Cynical]

Other stocks in Europe have been distracting but I just remembered this thread after looking at the APN chart today.

Thought it would be worth checking in with So_Cynical and seeing how apt he thinks the title of the thread is...

Wish I had kept APN on the list of pigs to short...finally starting to look sort of maybe oversold. Time to average down again? I wouldn't bet on it :

View attachment 44590

My last buy in APN was at 0.755 ill quote from the APN thread below.

(19th-August-2011) Bit the bullet and took my second and last small average down into APN today, waited for the afternoon sell off and got in at 0.755 bringing my average price down to $1.55. :crap:

So i have either made my worst trade in the last 12 months even worse, or made my overall APN position a little better...time is my greatest advantage over the market and of course time will tell all.

Big picture wise APN did grow their outdoor and radio revenues and still have total revenue of over 500 mill, a market cap of around 480 mill and debt of 650 mill, so the headline numbers aren't that bad...APN have a solid base to grow an on-line presence via the new acquisitions, the NZ Herald and there local papers and radio stations...i would argue a perfect base to leverage low cost on-line content off.

So at-least i caught some of the very bottom, as the SP does seem to have found some support at long last, the coming dividend reinvestment will drop my average price a little further....time will tell all and im in no hurry.

------------------------------

Re: It doesn't matter that you're wrong, only how long you stay wrong!!

Well im not a trendy so its just not as important for me as it is for the trend followers, the way i invest staying wrong is measured in months and years not hours, days and weeks....time is one of my great advantages over those with out the time to let there investments move.

Brings to mind a chart i saw when i exited my MRE position for a very small $ and % profit...see MRE thread https://www.aussiestockforums.com/forums/showthread.php?t=8922&page=18

Have a look at the chart below and consider my options over the 1145 days in total that i was an MRE shareholder.

ok so i could of exited with a 5% loss very early on and moved on to buy another falling stock in late 2008.

Or i could stay in, average down (3x), get a dividend and franking credits, get a Capital return (tax free) and finally sell at the small profit that i did.

Sure there's a big opportunity loss...but that's a bit of a fantasy loss because its not really measurable..i did make money on this and i was wrong for a long time, in fact maybe 90% of the time i held.

It doesn't matter that you're wrong, only that your right in the end, stick to your plan, and make good decisions...there's a time to admit your wrong and take the loss and there's a time to buy more and keep going.
~