My trading strategy blows goats... should I change?

Family_Guy said:

My strategy is pretty simple. My goal is/was to feed the family. With no debts i worked that out to about $150/day (5 day week).
So i thought, throw 10 or 20k at something, pull it out as quick as possible for a quick small profit, get up and go do some housework (or whateva)

It's worked a treat so far. Lost some dollars along the way, but done pretty well since going head first in April 08.

But just lately it's gone pear shaped. Not as in lost money. You see, i bought a couple of what i thought were well oversold stocks, in particular AIO and MRE and in Jan it was ESG, BRM etc. Sold out as quick as i could and was very happy at the outcome. But less than a week after selling all, all doubled in price and i wasnt there.

So OK, i turn 20 into 26, but it could have been 20 into 40.......see my problem?

Someone told me once before i started trading to set goals and to stick to them. Should i be changing goals or just be happy i ain't sitting here in socks only??

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Garpal Gumnut said:

Keep posting especially when 40k goes to 5k.

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Family_Guy said:

Re: My trading strategy blows goats... should I change?

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tech/a said:

Simple solution.

Let a % of the profit ride.

I know of a trader who 's strategy was to keep kis winners until they reached 100% or were stopped out.
Those that reached 100% he would sell the initial capital value and hold the rest as a free trade with a wider fixed stop.

Over 6 yrs he had 30 in his stable and if he needed cash would just sell a handfull of the worst performing stock.

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Megabuzz said:

Ya cant go broke taking a profit! Dont beat yaself up.

Megabuzz

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Trembling Hand said:

Of course you can. If you take your profits at $500 but you lose $1000 on a bad one you will go broke very quickly.

Even worse is I think family guy has said that he wants to pay daily living expensive from a very small capital base. Working out what you need per day is crazy. Because in reality you really need to make 4 times that each day.

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beamstas said:

Also because that $37,500 a year is on expenses, you are effectively having a $0 capital growth. So you need to produce amazing results year in year out just to keep food on the table.

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Trembling Hand said:

And there is the problem with working to a minimum daily figure. You get there on a good day/trade and stop. But stopping out a winner is toxic to long term profitability. You end up looking back after 6 months and doing the what if game. You soon realise having a daily target, especially a low one, just sets you up for failure.

Better to have a system/target that has a chance of making $10,000 per day rather than $150. What happens if you only get half way there. With the $150 system you will be bankrupt, with the $10,000 getting only half way to your goal will mean a few less options on your 50' boat.

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Family_Guy said:

My strategy is pretty simple. My goal is/was to feed the family. With no debts i worked that out to about $150/day (5 day week).
So i thought, throw 10 or 20k at something, pull it out as quick as possible for a quick small profit, get up and go do some housework (or whateva)

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Stop for a moment and think of the goats, I am sure they are quite happy with your current strategy.

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tech/a said:

Simple solution.

Let a % of the profit ride.

I know of a trader who 's strategy was to keep kis winners until they reached 100% or were stopped out.
Those that reached 100% he would sell the initial capital value and hold the rest as a free trade with a wider fixed stop.

Over 6 yrs he had 30 in his stable and if he needed cash would just sell a handfull of the worst performing stock.

Click to expand...

Trembling Hand said:

Of course you can. If you take your profits at $500 but you lose $1000 on a bad one you will go broke very quickly.

Even worse is I think family guy has said that he wants to pay daily living expensive from a very small capital base. Working out what you need per day is crazy. Because in reality you really need to make 4 times that each day.

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hahaha he obviously invested at the start of a bull market. In that case, if he didnt sell at the right time, im supposing his net worth would be ... the same as it was 6 years ago less inflation.. good idea on paper though

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tech/a said:

1991
Was the first to introduce me to the Stock Market.
Was a pretty wealthy guy---I just liked the idea but have never done it.
Lost track of him in 1996


If you think about it a bit you'd realise that to lose the stock he had at free trade would have to be delisted.

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tech/a said:

Simple solution.

Let a % of the profit ride.

I know of a trader who 's strategy was to keep kis winners until they reached 100% or were stopped out.
Those that reached 100% he would sell the initial capital value and hold the rest as a free trade with a wider fixed stop.

Over 6 yrs he had 30 in his stable and if he needed cash would just sell a handfull of the worst performing stock.

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ivant said:

Haha I do realise that it would need to be delisted. However, you have to remember that he would get stopped out at losses too. And after the effect of inflation, he would most likely end up close to break-even.

Let me explain, you hold 10 stocks (evenly spread capital) that you bought at $5 each. Over the course of the next 5 years you only have 5 left (due to those being stopped out) and they are worth $10. Five years later, you get out the capital you invested (on which you lost 5 years worth of inflation). If the stocks decline 80-90% over the next 2 years (like many did in the US), your are in a bit of trouble, because once again, after the effect of inflation, you are somewhere close to ground zero. Of course there are many variables that would need to be known to argue either successfully, but my point is that for this strategy to succeed and be effective, you need to rely on knowing when bull markets start, and bear markets end. In that case, it works very well because you make a lot of money.

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