3 Question from The Market Guys’ Five Points for Trading Success
Q: Hey in your book “5 points to trading success” mistake 8:unrealistic expectations paragraph 3, 1st sentence “The 1st & most realistic expectation from trading the markets is simply to outperform the broad market”. Does this apply to investments too, if so what time frame would you compare your portfolio to the broad markets, say your buying stocks at different time periods. Thanks – E.G.
A: The quick answer is that the rule applies to both trades as well as investments. However, there are some investments that will outperform the market but may take longer to do so. A stock that returns 5% for the first 3 years and then doubles in the 4th year may underperform the market on the short term but ultimately outperform the market. Your goal is to determine the lifespan of your investment as best as possible. All the while, make sure your expectations are realistic and not based on “hope”. Holding a dog because there is a remote chance that your company may hit the 9th inning home run is not a solid investment strategy.
Thanks for your question!
AJ Monte
The Market Guys
3 Responses to “Question from The Market Guys’ Five Points for Trading Success”
Hi Rick and AJ,
First off – kudos and thanks for a brilliant book, and passionate webinars/seminars etc.
I have a question which is about “profit taking” – you have not talked about it. I size my position to 1% loss, put my trailing stop etc. etc. But when do I get out with profit? What is the limit sell order price (as a percentage)?
(I prefer to place one-triggers-OCO orders – so I don’t have to keep watching the movement all the time)
Thank you,
I hope this was a very interesting post thanks for writing it!
Great info dude!!
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