coyotte said:An Investor seems to be chasing perceived bargains, whereas a Trader is concerned with defending a position.
Last week somebody at work asked me about how i trade. I told her i like to buy stocks when they are at their MOST EXPENSIVE. And she was like shocked and like "oh, wow, thats an interesting theory" and probably thought in the back of her head (i wonder how much this fool has lost so far). And i said well it is contrary to what most people think - but most people dont make money from trading stocks.
And then i explained about blue skies and volumes and when to sell. It took a few minutes and then i said to her it really is that simple. And then she said the classical line: Oh, but i could never put my money somewhere without knowing everything about the company.
And then i thought - time to get back to work.
coyotte said:3: Keep your position sizes within YOUR COMFORT ZONE --very important.
Position sizing (money management) and proficient use of stops (risk management) are both very important.
For me personally, sometimes my position sizes are a 1/3 or 1/2 of my initial capital (because i use fixed fractional position sizing and really like tight stops)
I think in general position sizing is an overlooked part of the trading plan.