Conventional Trading wisdom #1:
The trend is your friend.
Cut your losers and let your winners run.
Ever practise that?
It all makes perfect sense and sounds like a good plan.
The only problem is that most people are normal and the mind always wants more and more profits and it does not know when to stop. The trend stops and reverses.
In most cases, we do not take a profit because we want more. We call this human greed. This was one of my worst characteristics in not taking a profit at the right time. I always hoped for the trend to reverse in my favor however, it may happen quickly or over a period of time. I would just watch my "Would Be" profits turn into losers.
Not to worry, because I now will convince myself that I no longer want to be a trader and would not trade actively and would decide to become an investor again.
I would just forget about it and wait as it worked most of the time until I traded Nortel. Nortel went from $100.00 a share to flat out $00.00 as it bankrupted and disappeared.
The rest of the story you can finish for me.
CUT YOUR LOSERS AND LET YOUR WINNERS RUN
Ever practise that? In my daytrading days it seems like I would be cutting my losers every 10 seconds. thus creating a huge sum on my losing side and the winners that I let run made me a small profit. Again, it was all about my mind set. It seems that I would take my profits to soon and I can not see myself entering a market at a higher price that what I just sold it at. So what happens is the stock would trend up more. Just as I decide I will get back in, it starts to reverse and I would cut my loses and lose the profit I just made. It is just a vicious circle of never ending small profits and larger loses accumulated from a serious of small loses.
When I developed Neutral Trading, profits just started to come on a consistant basis. I could not disipline my mind to change. I was still the same stuborn, greedy trader as before. So what I was doing had to change. By accident, Neutral Trading evolved into what it is today. Neutral Trading works for the undisciplined mind set.
Neutral Trading widom:
Hold positions on both sides of the fence.
Take profits as you see them and at the same time work your loses.
Neutral Trading has strategies for an up, down and sideways market.
When the markets trend up or down, a Neutral Trader scalps the trend making money with the trend. In conjuction with the trend a Neutral Trader can also profit from against the trend thus, bringing in a positive profit with the trend and a delayed profit against the trend. In this case a losing position that the neutral trader hold is not a liability, but is acting like an asset.
I trade with the aid of a custom macro MS Excel program that feeds the live realtime data from the Excahnge and displays my profits and losses. The real time update allows me to take my profits quickly as they appear. This process is like the "High Frequency Trading Computers".
So if the markets go up and markets go down, why be directional. Take your profits on the upside and take your profits on the down side. Why be a bull and why be bear. Trying to guess which way the markets will go. Investing and directional trading is very similar, when you guess wrong you loss money. Most investing and directional traders are long in the markets, or they are bulls. One thing, did you notice that the bull has a ring in its nose. Thus, an investor and a directional trader is like the bull with the nose ring. The markets will lead you around like the bull is lead by the ring in its nose. Investing and directional day trading is still practiced but active neutral trading is today's way of profit taking in all markets. " Investing style of trading is passive,the markets control you ..... Neutral Trading is active, you control the markets."
Neutral Trading profits in an up, down and side market. Crossing a BUll and BEAR...........Producing a BUAR. Totally a differant animal.