As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

Welcome to Ministry of Wealth!

This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

It is here where I share with you how I did it! FREE Education in stock market wisdom.

Think Investing as Tug of War - Read more? Click and scroll down



Important Notice and Attention: If you are looking for such ideas; here is the wrong blog to visit.

Value Investing
Dividend/Income Investing
Technical Analysis and Charting
Stock Tips

Monday, 24 October 2016

Cut Losses Where Successful Investors Don't See Eye To Eye To Successful Traders

So you are a retail trader?

How about these wise words?

Markets are actually set up so that most traders must lose money” 

― Alexander Elder, Trading for a Living: Psychology, Trading Tactics, Money Management

The Elder Method

Dr Elder uses a money management (position size) algorithm based on 2% of trading capital. 

Dr Elder's 6% rule is that you can only lose 6% of your trading capital in a month. So, you add up what you have already lost and the risks on your open positions and once they reach 6% you cannot take any more trades in the month until one of your open positions moves higher so that you can raise your stop-loss level or you take some profits.

Once you have lost 6% in a month in actual losses, you must stop trading.

- Dr Elder's book Come Into my Trading Room.


Losing money is the least of my troubles. A loss never troubles me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does the damage to the pocket book and to the soul.” - Jesse Livermore


So you are a retail investor?

How about these wise words?

All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don’t work out. - Peter Lynch


What about Uncle8888?

So far so good. He is on track to become successful retail investor by Peter Lych's wise words.

That right. With his two big winners and the pluses from those have overwhelm the minuses from the stocks don't work out. The Hallmark for a lifetime of successful investing.








What is this difference to lay man deciding to become lifetime retail trader or investor?


In trading; you are playing Winning the Losers Game to become successful traders with control over their Entries and Exits; but in lifetime investing; successful investors are playing Winning the Earning Game. They let the Management and their Staff do the heavy lifting while these successful investors may sit back and relax. These companies are giving them back part earning and retain the rest of their earning to grow, evolve, innovate, differentiate and diversify or scale up horizontally and vertically.

In real world, real economy,  some will become great; some will remain great; some will become greater; some just so so and some will eventually disappear.


All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don’t work out. - Peter Lynch

Get it?



4 comments:

  1. LOL!

    You are making wannebe retail "investors" sweat.

    Especially if they are on the STI ETF vehicle only...

    How to have 2 - 3 big winners like that?

    But then, the counter-balance is your portfolio can't go to zero ;)


    "Success" is what we have to sacrifice to achieve it.


    Life is fair ;)

    ReplyDelete
    Replies
    1. STI ETF manager is already doing that. Some winners offset some losers. These retail investors in STI ETF are just outsouring this task to their STI ETF manager. Indirectly passive so comfortable.

      How different from domestic helpers cooking up their meals?

      Never midn. Their hands are not dirty. :-)

      Delete
    2. CW,

      Can't bring yourself to cut-loss? Weed out the losers?

      No worries!

      Every few years, the masters of the universe will kick out the lemons in STI and add new blood in.

      "Look ma! My hands not dirty!"

      And you can go brag you super like Peter Lynch - never have to cut-loss ;)

      How's that for the win?

      LOL!


      Its amazing the little lies we can tell ourselves ;)

      Delete
  2. Yes, investor has a lifetime to prove.
    Does trader has the same lifetime.

    ReplyDelete

Related Posts with Thumbnails