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Weapons of mass destruction

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WES
Super Contributor
Warren Buffett said derivatives are weapons of mass destruction, well I agree, after four years of warrants/ssf/cfd's I am finally done, finish and klaar.....only shares from hereon.
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18 REPLIES 18
Blik
Super Contributor
Why? Too much stress or too much loss? Or have you gained enough?
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Not applicable
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Not applicable
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sponono
Super Contributor
the problem is not gearing but overgearing. Garth uses gearing of 1.5 only very low. how much gearing do you use?
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BC02
Super Contributor
Most people get this wrong: Warren Buffet uses derivatives so he's not so against it. Berkshire Hathaway uses derivatives to protect his investments, a part of their income is derived using these.

"Buffett reiterated Saturday that he believes Berkshire's derivative contracts will ultimately prove profitable,"

http://www.usatoday.com/money/companies/earnings/story/2012-02-26/berkshire-hathaway/53254350/1

Derivates are not evil, in the same way that knifes are not evil, is how you use them that and what you do with them. Only in the wrong hands can they be bad.
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BC02
Super Contributor
Sorry for the bad grammer/spelling
Derivates are not evil, in the same way that knives are not evil, its how you use them and what you do with them. Only in the wrong hands can they be bad.
i.e. if you're not sticking to the 2% rule all you get is bust.
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Not applicable
Hang on chaps, it's all a question of scale. If your trading account is R1000 you trade by your rules and hopefully trade well. If your trading account is R100 000 the same applies. So if you're trading derivatives with R1000 and a 100 times leverage the same rules still apply. Don't blame the derivative or the gearing, "trade to trade well" and be very aware of the implications of each price movement.
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Russ
Super Contributor
Stay away from warrants.Spread,costs,time decay.Nuff said.
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Russ
Super Contributor
Not quite nuff said.If you can't make money trading shares you will not make money trading derivatives,your losses will just be geared! I agree with Farmer Brown-the principles are the same.
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WES
Super Contributor
I am not a professional trader, and I think if you are an amateur trader, if I can use that phrase, you must be able to invest a lot of time in analysis and research, because you are effectively competing against the professionals, if you dont do it or cant do it because of time constraints due to work or running your own business, I think you will eventually lose. It is not a game for amateurs, even if you think you are good.
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BC02
Super Contributor
agreed, trading takes time and research, however it is possible to come up with a system that takes little time and outperforms the market. Look at Simon's momentum system, once a year, or his Lazy system (takes 15 minutes a day).
I do believe (and I might be wrong on this) that the greater returns you want to make the more time actively you have to research (any different from any other career?) - saying this though active management doesnt guarantee outperformance and probably usually does the opposite.
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Alonzo7
Frequent Contributor
Agree totally with Russ....if you cannot make money on trading normal shares FORGET about any other instruments (your losses would be much much greater). All the best in your strategy.
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Cherry
Regular Contributor
since they've taken the stop/loss away from derivatives its not a pleasure trading. Isnt that illegal or unethical or something of that nature?
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BC02
Super Contributor
when did they do that? considering Im using stoplosses daily? they also have the autoclose (the ultimate stop loss).
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Not applicable
BCo2 are you trading SSFs or CFDs. There are no stop losses on SSFs.But there are on CFs. Don't know about CFDs.
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BC02
Super Contributor
CFD's and Futures. Didnt know there werent stop losses on SSF's. I stay away from SSF's, theres not enough liquidity.
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Cherry
Regular Contributor
That illustrates my point that previously we had stop/losses on SSF's and thats when I could earn a living trading, now we dont have them anymore. surely our broker OST should look into this. I have a feeling its illegal. How else do I exit my SSf,. What happened to Plan a Trade and Trade a Plan
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Cherry
Regular Contributor
The liquidity problem started when Stop/losses were revoked. i dont know if you were around when we could use them. Simon, we need those stop losses or I'll have an enquiry going on into the JSE's code of conduct.
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