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Trading Sayings: Fact or Fiction

  • #1
  • First Post: May 2, 2010 7:44am May 2, 2010 7:44am
There are plenty of little sayings in trading such as trend is your friend, catch a falling knife and such. I am curious to how many people can think of and whether they think they are helpful or completely useless.

Here is a few

The Trend is your friend : Definitely, its far better, especially for new trader to go with the flow and momentum than to try and predict a reversal and second guess the market.

Buy Low, Sell High : Nice in principal, but it is very hard to accurately predict tops and bottoms of market. Often when you THINK the market has reached the top and is going to reverse only to see it go higher, so perhaps Buy high, sell higher is more accurate.

Catch a falling knife : If you try it, usually you get hurt, both in trading and in real life lol.

What others can people think of, and is there any truth in these sayings?
  • #2
  • May 2, 2010 8:10am May 2, 2010 8:10am
Quote
"History repeats itself in the stock market. Many price patterns
and price consolidation structures that stocks form are
repeated over and over again."
- William J. O'Neil

All we have to do is learn how to spot them.
HELL IS EMPTY, ALL THE DEVILS ARE HERE. -- Shakespeare
  • #3
  • May 2, 2010 9:55am May 2, 2010 9:55am
The trend is your friend but you gotta earn on the turn too!
  • #4
  • May 2, 2010 1:20pm May 2, 2010 1:20pm
You can't buy low and sell high and trade with the trend at the same time.
  • #5
  • May 3, 2010 9:11am May 3, 2010 9:11am
Just heard another one.

"You can't get paid, till you exit the trade!!"
  • #6
  • May 3, 2010 10:42am May 3, 2010 10:42am
When you go with trend - the trend will end and
if you go against trend - the trend will continue.
The more experience the closer to the reality
  • #7
  • May 3, 2010 10:51am May 3, 2010 10:51am
Quoting ToxicChili
Just heard another one.

"You can't get paid, till you exit the trade!!"

Don't like that one. Unrealized PnL is still PnL.

I mean when you're down 100pips its real,
so the same is true on the upside.
  • #8
  • May 3, 2010 11:41am May 3, 2010 11:41am
Quoting Ted1983
Don't like that one. Unrealized PnL is still PnL.

I mean when you're down 100pips its real,
so the same is true on the upside.
Its not a saying I made up, one I heard another trader say. I think what it is implying is that you need to be able to exit a trade to actually profit from it. You can have a trade making a nice profit, but without a decent exit strategy you run the risk of giving it all back.


Another I heard, which can be used for almost anything including trading is.

"Failure to plan, is planning to fail."

Which is basically saying if you don't have a plan when trading, there is a good chance you will fail. (or something like that).
  • #9
  • May 3, 2010 2:18pm May 3, 2010 2:18pm
Quoting Ted1983
Don't like that one. Unrealized PnL is still PnL.

I mean when you're down 100pips its real,
so the same is true on the upside.
I respectfully disagree.

Let's think in terms of purchasing power. If you have a 200 dollar account and are down 100 pips (assume 1pip=1 dollar), then your purchasing power is cut in half. That nice dinner you wanted to take the wife to is now out of reach.

Even if you remain in the position, the money is gone. When it is all said and done, you could lose even more. What's more, that 100 dollar loss represents 100 dollars not available to take another position (which of course, would be that 1000 pip homerun trade). That is why a trader needs to be concerned with capital preservation foremost.

On the other side, suppose you are in a winning position up 100 pips on
your 200 dollar account. Can you go to Ruth Cris Steakhouse and show your PnL to purchase the meal? Of course not. They want actual money. And your "profit" is not actual money until you close out the position. Just ask you broker to send you a check for the 100 dollars while the position is still open. They wont of course. So your purchasing power has not increased even as your account equity has risen. Yet when your equity fell, you purchasing power fell in line with it. Thus they are not the same.

It is true that one may be able to add on and increase leverage based on
the 100 pips in the winning trade, but this is not the same thing. Being up 100 pips or dollars in this example, does not pay the rent. Closing out a winning trade for 100 dollars does.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #10
  • May 3, 2010 4:27pm May 3, 2010 4:27pm
"When you find yourself in a hole the first thing to do is stop digging!"
  • #11
  • May 3, 2010 8:46pm May 3, 2010 8:46pm
I agree that the trend is your friend but the key lies in your ability to identify the trend at the beginning. If you are entering trades at the last stage of the trend, you will be killed by the reversal.

As for buy low sell high, what I usually do is to buy the dips in an uptrend and sell the rally in a downtrend.
  • #12
  • Nov 18, 2014 12:39am Nov 18, 2014 12:39am
"Never short a dull tape."
"If The Fool persists in his Folly he will become wise." - William Blake
  • #13
  • Nov 19, 2014 12:25am Nov 19, 2014 12:25am
All those 3 lines are true!

But still some people makes money, they are the true Knife Juggler.
Discussion is an exchange of knowledge;argument is an exchange of ignorance
  • #14
  • Nov 19, 2014 1:55am Nov 19, 2014 1:55am
"only invest what w=you can afford to lose"

this one was one of the first things i've learned in forex
  • #15
  • Nov 19, 2014 4:55am Nov 19, 2014 4:55am
All trading rules are designed to make you lose money.
  • #16
  • Nov 19, 2014 1:55pm Nov 19, 2014 1:55pm
Learn to crawl before you attempt to walk..

And in view of MR's comment, see above, here is another: Few comments posted here are designed to make you run for the insanity unlimited express sans any trading, coming soon as a comment posted here ...
Sorry M ray, could not resist, lol
  • #17
  • Nov 20, 2014 5:39am Nov 20, 2014 5:39am
Quoting Forexnuts
Learn to crawl before you attempt to walk.. And in view of MR's comment, see above, here is another: Few comments posted here are designed to make you run for the insanity unlimited express sans any trading, coming soon as a comment posted here ... Sorry M ray, could not resist, lol
ok then tell me how this is not true (:

All trading rules are designed to make you lose money.

Thanks
  • #18
  • Nov 21, 2014 12:29pm Nov 21, 2014 12:29pm
Quoting Mingary
{quote} ok then tell me how this is not true (: All trading rules are designed to make you lose money. Thanks
Come on,, this is a loaded question - for one, the rules as you term it are there to ensure that traders who trade with skill, and apply all that they have learnt would make money. To say that these rules are there to make one lose money..well all i can say is that if everyone gets to make money, well, the market would just go belly up overnight..that is not how it works..

Nice to hear from ya MR..
  • #19
  • Nov 22, 2014 2:54am Nov 22, 2014 2:54am
Quoting Forexnuts
{quote} Come on,, this is a loaded question - for one, the rules as you term it are there to ensure that traders who trade with skill, and apply all that they have learnt would make money. To say that these rules are there to make one lose money..well all i can say is that if everyone gets to make money, well, the market would just go belly up overnight..that is not how it works.. Nice to hear from ya MR..
ok thanks, what I meant to say:

1) The majority of traders lose.
2) The majority of traders are hard-core rule followers
==> i.e. Trading as a business, you must follow the axioms and tenets of proper trader... etc
3) Therefore following rules are detrimental to success in trading.

If there is such a thing as a winning minority (which I doubt), they must certainly be doing something else to win....
  • #20
  • Nov 24, 2014 2:36pm Nov 24, 2014 2:36pm
Quoting Mingary
{quote} ok thanks, what I meant to say: 1) The majority of traders lose. 2) The majority of traders are hard-core rule followers ==> i.e. Trading as a business, you must follow the axioms and tenets of proper trader... etc 3) Therefore following rules are detrimental to success in trading. If there is such a thing as a winning minority (which I doubt), they must certainly be doing something else to win....
Majority of newbies lose their shirts for obvious reasons.. but as regards traders following rules losing, sorry, have a hard time swallowing that bit and here's why.
Let's accept your argument as it is, for the moment, So following rules makes you lose money in forex, right? And as for the traders who have traded profitably, these are the ones who have followed the same rules. Based on your argument, the traders who traded profitably, must all be doing so based on a random order.
But if that were the case, then all the traders who have lost their money should also be making money off the market..

That's why I said that the logic in your argument is flawed..and more to the point, the traders who have been trading profitably, including yours truly for the last few years has been making pips consistently with dd within limits and on the low side..just sayin'
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