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Dear comenow
Yes, I thought as much. I always had a hard time trying to come to terms with the fact that such a high percentage of amateurs go broke and disappear and all the old sayings. Two things could explain this: 1) The old sayings are correct but nobody follows them. 2) The old sayings are wrong.
I would suspect point 2 to be correct. I mean, it's right there! If a system suffers from stop losses then stop losses are wrong. However, there's a way out of this. Trade smaller volume. I know this is not sexy and it doesn't correspond to new traders' ideas of buying a Jag after three months. I think it works, though. I do it myself anyway and with huge success, but nobody wants to hear about trading much smaller volume (and consequently delaying the purchase of the Jag).
I'll leave you with a thought. A Business Week story on the bonds trader John Merriweather (the guy from the book "Liars' Poker" about Salomon Brothers) pretty much stated that one thing he learned as professional trader was, above anything else, ride your losses until they become winners. This sounds as insane advice. Even more so considering the trouble of LTCM. However, how does that correspond with things that rookies are taught?
Comments appreciated.
Cheers,
Smurf
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