I was going through my article archive and came across this old study that I hadn’t read in a long time which is a pity since it neatly encapsulates almost everything most traders do wrong. I have highlighted the bits that I think are important.
He is both an aggressive investor and an active gambler. This trader does not consider preservation of his commodity capital to be a very high trading priority. As a result, he rarely uses stop loss orders. He wins more frequently than he loses (over 51% of the time) but is an overall net loser in dollar terms. In spite of recurring trading losses, he has never made any substantial change in his basic trading style. To this trader, whether he won or lost on a particular trade is more important than the size of the win or loss. Thus he consistently cuts his profits short while letting his losses run. He also worries more about missing a move in the market by being on the sidelines than about losing by being on the wrong side of a market move; i.e., being in the action is more important than the financial consequences. Participating brokers confirmed that for the majority of the speculators studied, the primary motivation for continuous trading is the recreational utility derived largely from having a market position.
Chris
Some of us aren’t 20 anymore. We may have spent the last 35 years staring at monitors
White italics on grey background are hard enough to read. Red italics on grey are illegible
Please stop doing that
Thanks
Hey Nick,
If you click and drag your mouse over the text it all turns white, and the selected background turns black, which makes it easy to read (even for old blokes like me!).
Hope that helps for next time.
Cheers
Thanks Wes
I see Chris has changed the colour now too. Makes me feel young again. Must rush – there’s a special on zimmer frames at Woolies 🙂
An Analysis Of The Profiles And Motivations Of Habitual Commodity Spectacles?