"Timing is far more important than fundamentals and valuation"
The power of adding & reducing size to your position, working around a "core" position.
There are many who have taught traders a far too simplistic novice approach to entering and exiting positions. I'm not sure how or exactly why this style of market play has become so pervasive, but it has. Often times I am asked about a particular trade or I am asked about the direction of a particular security and it is usually followed up with a need for specific "price targets". See the problem with most traders mentality and their approach to the market is they rely on just 1 entry and 2-3 exit points or price targets. This style of market play is very restrictive and binds the traders optionality limiting their odds of success. Let me explain...
The beginner or novice trader tends to plunge all of his or her capital allocated for a particualr trade, into the market all at once - at one particular price, at one specific moment in time. If you truly think about this concept, it is quite naive or overconfident to say the least. Trading is hard enough as it is to try and get both direction and time right, yet why is it that some traders think they can pin point the exact moment in time at the exact price point to commit ALL of their hard earned capital? This style of market play limits your odds of success right from the beginning. But it's not just the 1 entry method that restricts your probability of success, it's this concept of 1-3 "price targets" after your enter that is again attributed to some magical price point with no concept of the time it takes or how a security goes about reaching that particular price target.
The power of adding & reducing size to your position, working around a "core" position.
There are many who have taught traders a far too simplistic novice approach to entering and exiting positions. I'm not sure how or exactly why this style of market play has become so pervasive, but it has. Often times I am asked about a particular trade or I am asked about the direction of a particular security and it is usually followed up with a need for specific "price targets". See the problem with most traders mentality and their approach to the market is they rely on just 1 entry and 2-3 exit points or price targets. This style of market play is very restrictive and binds the traders optionality limiting their odds of success. Let me explain...
The beginner or novice trader tends to plunge all of his or her capital allocated for a particualr trade, into the market all at once - at one particular price, at one specific moment in time. If you truly think about this concept, it is quite naive or overconfident to say the least. Trading is hard enough as it is to try and get both direction and time right, yet why is it that some traders think they can pin point the exact moment in time at the exact price point to commit ALL of their hard earned capital? This style of market play limits your odds of success right from the beginning. But it's not just the 1 entry method that restricts your probability of success, it's this concept of 1-3 "price targets" after your enter that is again attributed to some magical price point with no concept of the time it takes or how a security goes about reaching that particular price target.
