Hi all,
Just been reading the book ‘The New Market Wizards - Conversations With America’s Top Traders’. It is an old book from 1994 i believe and is mainly about the physcology of trading which I have found very interesting. One quote that kept coming back to me was from a trader called Marty Schwartz ( think the quote was from the first Market Wizrds book but was brought up again as to why it was still valid).
‘If a trade which you are very worried about does not turn out as badly as feared, dont get out. The rationale is that if there is no follow-through in a direction adverse to your position, then there must be some very strong underlying forces in favor of the direction of the original position (since the reasons-fundamental or technical-for your own fears are probably shared by many others in the marketplace’.
Now I was trying to think of any occasion when this would apply. Marty Schwartz was obviously a big time trader dealing in millions so often had large or no stops in place. As I (and im guessing most reading this) always trade with stops, I cant think as to when this would apply. Has anyone had an experience which relates to this quote?
Another thing which was discussed was how these major currency trading generate profit. It says that back when the book was written, that in theory if they traded only for the bid/ask spread and never took any posistion trades, they would make more money than if they actively took positions! Surely this can not still be the case these days?
Sorry if not the most informative thread but I just found these things very interesting and surprising!