Post feedMaster Talk Presents...William Eckhardt!
“One adage that is completely wrongheaded is that you can't go broke taking profits. That's precisely how many traders do go broke. While amateurs go broke taking large losses, professionals go broke by taking small profits. What feels good is often the wrong thing to do. 
Human nature does not operate to maximize gain but rather to maximize the chance of a gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance. Two of the cardinal sins of trading - giving losses too much rope and taking profits prematurely - are both attempts to make current positions more likely to succeed, to the severe detriment of long-term performance. Don't think about what the market's going to do; you have absolutely no control over that. Think about what you're going to do if it gets there. It is a common notion that after you have profits from your original equity, you can start taking even greater risks because now you are playing with "their money". We are sure you have heard this. Once you have profit, you're playing with "their money". It's a comforting thought. It certainly can't be as bad to lose "their money" as "yours"? Right? Wrong. Why should it matter whom the money used to belong to? What matters is who it belongs to now and what to do about it. And in this case it all belongs to you.”
If you are not familiar with who this gentleman is, hurry and find out. A small wager between two traders back in the early 80's (William Eckhardt & Richard Dennis) started an amazing adventure that would change how the make-up of a trader was viewed. They started a group known as the "Turtles." The Turtle experiment proved that you did not need a doctoral degree in mathematical logic to win. In fact, it proved anyone can become a trader.
The quote here ought to lead to an eye opening event in tonights presentation. I myself have always said that it is VERY possible to "go broke taking profits." Tonight I have an exercise you can all participate in to prove this point.
See you then!
Human nature does not operate to maximize gain but rather to maximize the chance of a gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance. Two of the cardinal sins of trading - giving losses too much rope and taking profits prematurely - are both attempts to make current positions more likely to succeed, to the severe detriment of long-term performance. Don't think about what the market's going to do; you have absolutely no control over that. Think about what you're going to do if it gets there. It is a common notion that after you have profits from your original equity, you can start taking even greater risks because now you are playing with "their money". We are sure you have heard this. Once you have profit, you're playing with "their money". It's a comforting thought. It certainly can't be as bad to lose "their money" as "yours"? Right? Wrong. Why should it matter whom the money used to belong to? What matters is who it belongs to now and what to do about it. And in this case it all belongs to you.”If you are not familiar with who this gentleman is, hurry and find out. A small wager between two traders back in the early 80's (William Eckhardt & Richard Dennis) started an amazing adventure that would change how the make-up of a trader was viewed. They started a group known as the "Turtles." The Turtle experiment proved that you did not need a doctoral degree in mathematical logic to win. In fact, it proved anyone can become a trader.
The quote here ought to lead to an eye opening event in tonights presentation. I myself have always said that it is VERY possible to "go broke taking profits." Tonight I have an exercise you can all participate in to prove this point.
See you then!
