Protecting our gains from the market actions???

Just For Thinking ...





Read? Jack Schwager Market Wizards Seminar Review

Martin Schwartz was formerly a fundamental analyst on Wall Street. After he become a trader, he managed to achieve an (audited) average return of 25% over a ten year period. Don’t let your jaws drop, it’s 25% a month and not 25% a year. This he did using purely technical analysis.

There were only two months that he lost money, once when he lost 2% and another when he lost 3%. However, Martin always took his profits and invested into treasury bills, so you do not see an astronomical compounding of returns.


Read? Jesse Livermore Money Management Rules

Rule 5: Take the profits in cash

Jesse Livermore felt that after a huge winning trade, you should take 50% of that and place it in cash. This money should be put aside in the bank, hold it in reserve, or lock it up in a safe-deposit box. I do not necessarily agree with this money management rule, because if you treat your investment wins as if they are going to eventually leave you, this must have some affect on your subconscious, which in turn will hurt your profits. I think if you put aside maybe 20% and then treat yourself to a nice dinner or a small shopping spree is better because it provides you positive reinforcements of your trading activities.

It is a shame that Jesse Livermore was unable to follow his own money management rules, because if he had, maybe his life would not have ended so tragically.



Createwealth8888's comments

Mr Bear, I am not going to give back all to you like in 2007.

No way!!!