tag:blogger.com,1999:blog-30128229.post5044341471930840000..comments2023-09-30T07:11:55.493-06:00Comments on MarketFN.com: Part I - The Basics of Profitable TradingInvestment Househttp://www.blogger.com/profile/14771320644915759241noreply@blogger.comBlogger15125tag:blogger.com,1999:blog-30128229.post-23121506232433486882009-09-06T18:58:34.827-06:002009-09-06T18:58:34.827-06:00Thanks for writing, Morris. I believe it is a pret...Thanks for writing, Morris. I believe it is a pretty well recognized fact that the large majority of traders do not make a living trading and, in fact, lose. There are certainly a number of reasons for those failures, and among them are the failure to start with a plan, the failure to utilize an appropriate reward to risk ratio, lack of money management, and permitting fear and/or greed to rule their trades.<br />Bill KraftBill Kraft, MarketFN.comhttps://www.blogger.com/profile/08274803638438137352noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-21450457962753721822009-09-04T21:58:59.009-06:002009-09-04T21:58:59.009-06:00One thing about trading that bothers me is no one ...One thing about trading that bothers me is no one is up front about there profit or loss.I have yet to meet anyone whom makes money trading except for you Bill and some other T.V personalities. <br />I know Bill you mention you make a nice living and I assume that is true.I wonder what percentage of traders are making a living.<br /><br />I can only surmise that a succesfull trader might make 20% per year on their accounts.Not sure if they could do it year after year.<br />If that was true I would need 250,000 in my trading account to make a simple living of $50,000.<br /><br />Anyone personaly know someone doing this ? Any comments that could help enlighten me would be appreciated.<br /><br />MorrisAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-30128229.post-17882799870761296332009-09-03T00:33:24.729-06:002009-09-03T00:33:24.729-06:00Great post Charles very insightful.
As Bill notes...Great post Charles very insightful.<br /><br />As Bill notes concept of trading is simple. ( no big losers )<br /><br />but definitely not easy<br /><br />MorrisAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-30128229.post-63725850497373936522009-09-02T08:35:51.533-06:002009-09-02T08:35:51.533-06:00Thanks, Charles, for your thoughtful contribution....Thanks, Charles, for your thoughtful contribution.<br />Bill KraftBill Kraft, MarketFN.comhttps://www.blogger.com/profile/08274803638438137352noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-71301820881753260482009-09-01T08:31:29.922-06:002009-09-01T08:31:29.922-06:00Thanks Bill
.....and I thought I would comment f...Thanks Bill <br /><br />.....and I thought I would comment further on the simple yet very powerful concept. <br /><br />It all starts with the 4 possibilities. Once you put on a trade only four things can happen:<br /><br />1- You can win big<br /><br />2- You can win a little<br /><br />3- You can lose big<br /><br />4- You can lose a little<br /><br />The goal is to eliminate number 3. What do we do?<br /><br /> <br />Number #1- First form a hypothesis. <br /><br />Your hypothesis can be as simple as this.<br /><br />1- You (or your system) think the stock or future is going up.<br /><br />2- You (or your system) think the stock or future is going down.<br /><br />How you arrive at this conclusion may be based on your analysis of fundamental indicators, technical indicators or a trading system. You might even be in agreement with someone else’s analysis. For example, you might agree with Morgan Stanley’s opinion that crude oil is going much higher.<br /><br />However, what you do next is extremely important.<br /><br />You need to determine how much money you are going to risk on this particular trade. The easiest way to do this is to use a percentage of your account value. For example, if your account value is $100,000 and you are going to risk 1% of this value, you are going to risk $1000. You do this because your hypothesis might be wrong or you might be just early. By defining and accepting your risk, you hopefully eliminate the possibility of the big loss.<br /><br />Number #2-The trend should confirm your hypothesis<br /><br /> <br /><br />This is done for two reasons:<br /><br />1- If you are trading against the trend, you may not be in sync with your hypothesis and you either going to get stopped out often or suffer a big loss.<br /><br />2- If you are trading with the trend, you know anything can happen. You are positioning yourself for the possibility of winning big.<br /><br />Winning big is what will eventually make you a successful trader.<br /><br />Number #3-You think in probabilities for two reasons:<br /><br />1- It is unreasonable to believe that every individual trade is going to be profitable. It is equally unreasonable to believe that you will be able to identify only the successful trades. However, each trade has a probability of being profitable. The way to determine how your trading is doing is by evaluating a series of trades over time.<br /><br />2- Evaluating your trading over a series of trades will also confirm or not confirm your hypothesis. If after a series of trades you are losing money it might be time to review your hypothesis.Charles Maleyhttp://www.viewpointsofacommoditytrader.comnoreply@blogger.comtag:blogger.com,1999:blog-30128229.post-57842740462646858522009-09-01T07:57:46.544-06:002009-09-01T07:57:46.544-06:00Alf, I don't blame you for being stuck. I made...Alf, I don't blame you for being stuck. I made a mistake on the math on page 88 and have tried to correct it both in former Newsletter articles and in Amazon contents. I am truly sorry. The principles, however, are accurate.<br />Bill KraftBill Kraft, MarketFN.comhttps://www.blogger.com/profile/08274803638438137352noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-30987566263732772412009-09-01T07:56:25.509-06:002009-09-01T07:56:25.509-06:00Anonymous, Ireland is just great. We just left Dub...Anonymous, Ireland is just great. We just left Dublin and did visit Trinity College and saw the book of Kells among a number of other delightful things.<br />Bill KraftBill Kraft, MarketFN.comhttps://www.blogger.com/profile/08274803638438137352noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-4669562440378717992009-09-01T07:55:15.505-06:002009-09-01T07:55:15.505-06:00Robin, thanks for writing and Morris, thanks for y...Robin, thanks for writing and Morris, thanks for your helpful answer. Stops are one of the most difficult things in trading because they generally involve subjectivity. As you note, Morris, it is not unusual for even very successful traders to have only 50% winners. As I have discussed in past articles and will discuss in future articles, the important keys are establishing appropriate reward to risk ratios and money management.<br />Bill KraftBill Kraft, MarketFN.comhttps://www.blogger.com/profile/08274803638438137352noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-53714911729548929542009-09-01T07:53:10.778-06:002009-09-01T07:53:10.778-06:00Hang on for Part III, Monty and you will see some ...Hang on for Part III, Monty and you will see some specific suggestions on how I try to let profits run. Thanks for writing.<br />Bill KraftBill Kraft, MarketFN.comhttps://www.blogger.com/profile/08274803638438137352noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-87334017004834039202009-08-30T21:40:06.133-06:002009-08-30T21:40:06.133-06:00Hello Bill,
I have been reading your first book a...Hello Bill,<br /><br />I have been reading your first book and I am stuck at page 88. I can't get past it because I don't understand.<br /><br />I have no experience with option spreads nor collars so I need a little help here.<br /><br />You mention you sold the $250 GOOG call for $40.40 as part of a collar you assembled, and two months later you bought the call to close that leg of the collar. GOOG had soared from $231 to $380. What I don't get is how you could have purchased the $250 call for $61.20. From what I have read in previous chapters of your book, if GOOG is at $380, the $250 call would be worth at the very least $130 dollars assuming it had no time value, which was not the case.<br /><br />I keep thinking and I figure may be you meant to say $161.20, not $61.20, but then you would not have made a loss of $20.80 on that leg, instead you would have lost $120.20. The overall profit of that trade would then be $13.60, or a 5.7%, which is not bad for a period of 2 months, but it is not 58%.<br /><br />Thank you for your weekend newsletter which I look forward to every Saturday.<br /><br />Alf.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-30128229.post-5309603890746208742009-08-30T13:21:18.784-06:002009-08-30T13:21:18.784-06:00In response to Robin's comment. Most pro's...In response to Robin's comment. Most pro's don't do much better than 50/50 on there win losses so you have to realize you will be stopped out alot.It sounds like your entries are at the top of a run,and your getting retracement moves right after your entry.Not sure if your day trading but if you are your stops are pobably very tight and more likely to be hit. The lower band on the bollinger and MACD in "Sping" can make a good entry indicator.<br />I'm still a learning amateur so maybe Bill could shed some light on my thoughs.<br /><br />thanks<br /><br />MorrisAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-30128229.post-45427842425202409012009-08-29T22:47:57.571-06:002009-08-29T22:47:57.571-06:00testtestAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-30128229.post-8548120476537215152009-08-29T16:02:27.893-06:002009-08-29T16:02:27.893-06:00Bill,
Great article on cutting losses! Also, hope...Bill,<br /><br />Great article on cutting losses! Also, hope you are enjoying Ireland, and all it has to offer! I'm from Dublin, and here in the U.S.A (aka The Promised Land!)living for 18 years, and hope you get to visit Dublin and Trinity College:)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-30128229.post-73395752834572519652009-08-29T14:15:31.669-06:002009-08-29T14:15:31.669-06:00Hi Bill:
I have been following your newsletters, ...Hi Bill:<br /><br />I have been following your newsletters, and really appreciate your style. I am usually in agreement with you, and have found you to make the most sense of several newsletters I have watched.<br /><br />I read on how you plan to write about specific ways to cut losses and allow profits to run. <br /><br />If possible I wonder if you can comment concerning this:<br /><br />I have set up a lot of trades with stop loss orders, but it has been quite frustrating for me. Many times when I do this, I find the trade seems to gravitate to my stop loss, trade me out, and promptly go higher. When I set a wider range on the stop loss order, it still seems to do this. I don't know if you have experienced the same phenomenon. This has happened to me particularly with the QQQQ ticker symbol. <br /><br />Lately I have been trying to cover my option trades, by buying options on both call and put sides, such that if the stock moves against me in either direction, it will cover the other, with GTC profit exit orders in both directions. This seems to work a little better, but it is difficult to calculate the best way to do this. <br /><br />Please let me know if you can shed some specific insight and examples on this, and also if you have experienced the same phenomenon at times with stop loss orders, or if you think this phenomenon is only coincidence.<br /><br />Best Regards,<br /><br />Robin Martin RN, LNCCRobin M.noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-47298086117792017212009-08-29T13:13:11.136-06:002009-08-29T13:13:11.136-06:00OK Bill, and yes it is a very easy concept to gras...OK Bill, and yes it is a very easy concept to grasp. But, here is the problem: while it is easy for a stop loss exit strategy (you know the current price, and you can use some kind of a %, a moving average, or a pivot to control your losses), the real test is how far you let your profits run (20%, 50%, 10 bagger). I would like to see how you would apply all of this to daytrading?<br /><br />Have a nice trip Bill,Monty Znoreply@blogger.com