March 24th 2008
Do Trading Ideas Help or Hurt?
I am re-reading one of my all-time favorite trading books “Trader Vic - Methods of a Wall Street Master
“It’s one thing to manage someone’s money, even a friend’s, on a professional basis; if you lose, it’s just part of the professional agreement. It’s another thing to offer market advice when you think you’re doing people a favor - you usually hurt them more than you help them.”
Vic says point blank:
“Don’t do your friends a favor by offering them unsolicited advice on any market position.”
Lately, I’ve not posted many trading ideas. There are a couple reasons for this, but Trader Vic reminded me of this rule that I had long forgotten. I have to confess, I’m not good at sticking to it. The problem is I love to talk about markets and I love to share my opinions. I would argue that most traders/investors with a few years experience wouldn’t take a stock tip or idea at face value. What I see on a chart may be different than what you see. What may be a good idea to me, may be/is a crappy idea to you.
But I think the combination of stock tip and a less experienced trader is problematic. When I started out and I hit a losing streak, I traded other people’s setups. I had ideas coming from chat rooms and news letters. It was a distraction from what was truly the problem. The problem, in that case, was the perception that my method should be a consistent winner. I hadn’t defined “consistent” properly and didn’t understand that in a loser’s game you lose more than you win. And even if you understand that you lose more than you win, no one starts out thinking they may lose for weeks at a time.
So will I stop posting trading ideas? Probably. In my estimation, the only reasonable caveat is to illustrate a method or concept. What are you thoughts?
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4 Comments »
dsb on 24 Mar 2008 at 4:53 am #
Like it or not, each of us must take responsiblity for our actions. Maybe everyone goes through a period of time, thinking that there is a trading setup that they have not found and jump around to different trading styles. I have certainly been one to think that somehow everyone else must know better than me.
Personally, I enjoy reading different ideas on the approach to trading, I love talking (reading) your post and a few others since I have not even one person that I can actually talk to about the market.
Keep up the good work, I find trading ideas interesting.
Tyro on 24 Mar 2008 at 7:16 am #
I’ve enjoyed reading your trading ideas but I’m a new swing trader, so what the hell do I know? Your writing is worth returning for without any picks, so feel free to take your blog in whichever direction pleases you without worrying that you’ll drive us away.
Alex on 24 Mar 2008 at 2:21 pm #
I think it is better to show someone how to fish than to give him the fish. At your place I would not talk about setups in advance…just talk about it after the fact.
Jonathan on 25 Mar 2008 at 5:35 pm #
@dsb: Thanks for the feedback. I’m like being able to read others ideas as well.
@Tyro: Hey Thanks for the complement. I’m not totally moving away from ideas, but I think I’m going to try to use them to illustrate a concept or something like that…
@Alex: I agree with you, but I’m undecided on when to share the idea. There’s a lot of blogs that do both. I kind of like what I started doing. Giving the setup and following it each week until I sold.