Insane market

[#1]

I would like some ideas on whether or not i must put some money into AGL. I want to put money in for the long haul, but when i look at the RSI, Stoch it all shows down. For the one of the biggest market crashes ever (people started comparing to the 1929's crash) this market doubled in the last four months. This "V" shaped recovery looks to be a bit fast for such a big crash? I know the market can stay insane longer than what i can stay solvent, but are we going to see a correction any time soon, and how much are we looking at? i am wooied that if i wait for the pull back that (if and when it comes) will it come down to the levels that it is now or lower? Any veiws will help.

[john_1]

coventional wisdom says it must pull back...so mr market will try do the opp

[#3]

I live by the philosophy that an opportunity to enter on my system will always present itself, now or next month or the month after. If I miss out on the stuff in the middle, so be it. My strategy is that if I am not already in the market in these rallies, i wait. If I am already in, I ride it out.

[richardw]

My strategy is that if I am not already in the market in these rallies, i wait. If I am already in, I ride it out.

I do the same thing, but isn't it fairly irrational? In a strictly logical system, the decision to get in a month ago is irrelevant to what you think the market will do now. You might have made some cash in the rise and feel that it's a buffer, but a drop tomorrow is still a loss. Being in is a decision you make every day, even if it's only implicit. The only difference is the trading cost.

I know you're meant to let the winners run, but then you should just jump on the winners if you missed them.

Thoughts?

[GarethJ]

I recently watched a very interesting video talk where the speaker describes how bad humans are at making comparison-based decisions, As an example, consider two scenarios: 1) Place a R2000 trade and make 100% i.e. make R2000 2) Place a R60,000 trade and make 5% i.e. make R3000. Humans would generally be happier with Trade 1, even though more money was made in Trade 2. This type of comparison-based thinking is generally the basis for human decisions (100% better than 5%) and would probably help explain how most of us trade... Check it out: http://www.ted.com/talks/dan_gilbert_researches_happiness.html

[divz]

I think your strategy depends on whether your a trader or an investor.I trade only on price ie determine entry and exits before the time if it takes a day/week/mnth (but not longer)to reach goal it does not matter.whats worked for me is that i only watch a handfull of selected shares ignore everything else. after a while you get to know these shares and how they move in diferrent situations very well. Then just trade the price.these shares always present an oppurtunity to go long or short and because you know the share well you feel fairly confident about the trade.

[WES]

I live by two old rules, never be greedy but never be afraid and buy into weakness and sell into strentgh. I trade warrants for risk and and buy shares for investment.

[#8]

Ja richard, I have thought about that point over and over again - if I am prepared to hold, then why is that any different to buying? My justification for sticking to my strategy is this, my strategy requires me to set a stoploss at least 2*ATR from the low price Anything less than that, and the slippage costs really chew into your portfolio. In a rally, this puts my stoploss pretty far away. Now to make it worthwhile, I need to gain at least 4*ATR. I have decided that a pullback increases my chances of the 4*ATR, because a) the true range tightens, meaning my stoploss gets closer, and b) a pullback defines a recent high, which is usually about 2*ATR. That means that my breakeven point is usually the recent high, and I live my the philosophy that recent highs are likely to be retested.

[louisg]

Hi divz. What would you consider the optimum number of shares to track in terms of the amount of time to keep up with all of them AND having a large enough universe to allow "enough" opportunities? Does your long term universe differ from your trading universe?

[Hibiscus]

True. From a risk reward perspective why dont you place R60 000 on trade 1?

[#11]

Divz, I understand your threory and to be honest i think almost every trader/investor has a similar handfull of favourites they track. But the ultimate question that starts to creep in, how much emotion do you start to attach to the share/company and thus the trade? Surely human nature is to ultimately be attached more than you need to and you could then start trading on emotion rather than cold stats and TA.

Emotion is ultimately the killer for almost every trade that goes wrong. You give it just one more day/week to recover and forget/ignore your stops becuase your history with the share says you know better than Mr market.

If you could learn to take emotion out of it then you should be a better trader (in theory) and you develop your system to match your requirements.