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不完整啊你贴的
How to Trade Successfully using my Weekly Picks
1. The Plan
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To trade successfully, you need a trading plan before each trade. This trading plan must help you to answer the following five questions:
(1) What to buy?
(2) How much to buy?
(3) When to buy?
(4) When to exit with a loss?
(5) When to exit with a profit?
All five elements must be in place before you carry out any trade. If you wait till you have a position and then decide when you will exit your trade, it will be too late. Your emotion will have take control of you and you may make a subjective judgment. Whether your judgment is right or wrong is of no importance, as you lose consistency in your approach. The only time you can make an objective judgment is when you have no position yet. It is only after you develop this habit then you can consistently make money.
Many people are not able to make money because their plan are not completed, it lack one or more of the five elements.
Note: The Larry's weekly pick is your trading plan. The one you have been saw only cover element (1), that is, what to buy? This is only useful for those traders that have their own trading system, or trading plan. They can use the list to feed into their own trading plan.
I am currently working on a more comprehensive one, that include all the five elements. That will make it more completed and useful to those that do not have their own trading system/plan.
2. Starting Capital
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Trading must be treated like any other businesses in our capitalist society. You need a minimum starting capital to do your trading business. You will have fixed overhead like commission and slippage. In addition, there are variable overhead like losses. Unless you are a genius or extremely lucky, else you will need to incur these overhead before there is any cash flow into your account. As such, you need to manage your cash flow like any other business. If your cash run out due to these overheads, you have no capital to continue your business, so as to say. Your broker will not take your trade and that is the end of your business.
Your principle activity of your business is to manage your risk. Risk is the probability of loss. The current industry standard is allocate a risk of no more than 2% of your capital for each trade, 1% is recommended if possible. Why this 1% or 2% of capital? This is because, you will still be able to trade if you suffer a continuous string of say, 10 losses in a row.
So now you know how much your risk per trade is, then how do you determine your minimum startup capital?
The truth is that your starting capital is very much dependent on your commission charged by your brokerage firm. The lesser your commission the lesser your minimum starting capital is required. This is due to the efficiency of your cut-loss.
Let do some maths. If you have a starting capital of $5,000 and say, your risk per trade is set as 1% of your capital. Your risk per trade is now $50. If your commission is $10 per trade, you will incur a total commission of $20 after you buy and sell when the trade is completed. That is, your commission overhead is about 40% of your risk allocated! And it is not very efficient, you will most likely be killed by your brokerage firm before the market kill you. Think about it!
My recommendation for minimum capital is as below.
Commission Capital
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$ 1.00 $ 10,000.00
$10.00 $100,000.00
$30.00 $300,000.00
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If you do not have enough starting capital, please do not trade, else you will be doing business on reduced chance. If the reason is due to high commission, I suggest you search for a better brokerage firm. I know there are brokerage firms that charge a minimum of $1.00 for the first 100 shares traded.
3. Conclusion
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Successful trading required a good trading plan and a minimum starting capital. I can assist you by providing you with a trading plan (Larry's weekly picks), and the rest is up to you! Your success is very much dependent on your discipline to following your plan. Your greed and fear will most likely interfere with your plan.
Good luck and happy trading!
Why speculator can make spectacular returns?
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If you want to be a successful trader, you need to know why you can rip money off the market. Of course, you can still make a substantial returns even without that knowledge, but knowing that will make you a better trader and lead a more meaningful life.
A lot of people never take the effort of knowing why they can make money from the market. Investors believe that they are entitled to the profits and losses of the company that they have invested. As shareholders, they make money when the company make a profit. On the other hands, traders thought that just by making the right buy and sell and at the right time, they can make money.
Is that simply so? The answer is NO!
To make money in our current capitalist society, you need to provide either valuable products or services to the consumers. What kind of economic services do these people provide to the consumers by investing in the right stocks and guessing right? If that what your thinking is, then investing or trading is like gambling, placing the right bet. Your returns will be like on the gambling table. Luck will play a major role.
To make money in the market, you need to know what kind of economic services you are providing to the society. The main reason why speculator or trader can make spectacular money is because they are providing an valuable service of transferring and handling risk that people want to get rid of. As for investor, you make money when you invest in company that ARE GOING (NOT CURRENTLY) to provide MORE valuable products or services to the consumers. You do not make money just simply when the company are currently do what they are doing. It is the same reason, why earning sometimes does not relate to its share prices.
[Note: I hope you understand my statement for the part of investor, anyway, to keep it short, it more difficult to make money as an investor because, first thing first, it difficult to do prediction. Secondly, how confident are you that you going to predict correctly for say the next 30 years? Warren Buffet did very well because he understand which company will continue to give added value to their consumers. But can you do what he did?]
As a trader, you are in the business of managing risk. You buy from people who do not want to handle that risk anymore. You sell if the risk is too high for you. You transfer the risk to others who are more willing to handle it, so as to say. You are able to make money because you provide a valuable service of transferring and handling risk that people want to get rid of. In addition, you provide another valuable services of providing liquidity to the market. Without traders, market could not function. And without the market, young promising company will have difficulty in raising funds to expand. Ultimately, consumers suffers due to the lack of products and services that these small companies fail to provide without the expansion.
Since your principle business activity is to manage risk, how much money you make is dependent on how well you manage your risk. Do not lose the tree for the forest! You do not make money by making the right buy or sell! That not the economic reason why you make money. If you cannot manage risk well, the market will take your money away and kick you out. The market will reward those traders that can manage risk well, so that they can continue to provide their useful service of risk handling to others.
Now that we know why we can make money from market, that is, risk management. But what are the tools available that can manage your risk in trading?
Fundamental analysis?
Go ahead if you think that the way and have the time and faith to try it out!
Technical analysis?
Go ahead if you think that the way and have the time and faith to try it out!
Let the truth be told!
To manage your risk, you just need to limit your loss per trade! What tools do you need to limit your loss per trade? It your DETERMINED WILL and your INTENTION to do so!
How much time and hard work does it need to do that?
If you can manage your risk within half hour per week using your DETERMINED WILL and INTENTION with simple strategy, so be it. The market will be perfectly alright with it. Some business need time and hard work to do well, but definitely not risk management for trader. Why chose a more difficult way of doing things when there are more simple and elegant one? My guess is that many people want to use the hard ways to satisfy their ego. To show off their intelligence to their friends/peers that they can make money using the hard ways where many others have failed! |
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发表于 2005-12-5 13:25
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