People love to read about how the men with billions at their disposal are doing, see 2 recent articles HERE and HERE. See a rundown of all their 2008 numbers below:
And how does that all help you? It doesn’t! All is does it prove there are many many different games being played in this joke of an industry–considering how much money constant underperformers earn for themselves instead of their investors–and there’s no reason you should be playing the same game as most people ie. fee-earning mediocritites and cyclicality-knowledge-lacking worker drones aka typical soulless incompetent financial scum.
No, the majority of us have small trading/brokerage accounts and you must learn to use that your advantage. These billion hedge funds can’t move in and out of anything very quickly–picture the absurd pattern day trading rule times one billion–so they’re forced to suffer big drawdowns when they’re wrong.
EVEN WHEN YOU’RE WRONG, YOU NEVER HAVE TO SUFFER A DRAWDOWN. EVER.
That’s right, when your account is small, as TIM has been, your finger, like mine, should always be on the mouse, ready to exit a position at a moment’s notice. It took me a few months’ of trading like a poor person again to grasp that, but now that I’ve gotten into the “poor man’s groove”, you notice my drawdowns have been buttoned up and even though I still screw up plenty of trades, my numbers are nice and comforting.
Sure, thanks to my wussieness, I’ve missed out on some big gains–ERII, MKTY, USS come to mind–but when you’re tiny, it’s all about safety first.
Remember, while it’s nice and easy to be aggressive and dominate even the top performing 40%-returning hedge fund in just a few days, it’s even easier to lose 40%. And considering how unread the majority of you are, odds favor failure.
MORAL: If you’re poor, young, patient, or inexperienced, PennyStocking is great for you (learn HERE!), just trade as scared as if you’re a broker who lost your clients’ money on auction rate securities!
Tags: Basics, Safe Trades
