Best simple investing advice? 🤔

Don't worry about winning, just don't lose. 💸
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Gaurav Kotak @ Fincredible's avatar
Warren Buffet says, there are two rules in the stock market
  • Never Lose Money
  • Never forget Rule #1
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Dillon Jacobs's avatar
Indeed!
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Michael Panebianco's avatar
One of the most memorable pieces of advice I've seen so far was to be process-oriented rather than results-oriented.

It's helped reduce the psychological impact of failed trades and if my process is sound then the value of the wins will outweigh the losses.

It also means that if I go through a rough patch it may not necessarily mean that I'm a bad trader but that my process needs some amendments. And as long as I suitably journal my trades then I can easily see where those amendments need to be made.

Long story short - keep good trading records and consider how far you've come from 3 months ago/a year ago/when you you started.
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Doug Helton's avatar
@tecantra love the methodical approach to that. What’s one core part of your process right now?
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Michael Panebianco's avatar
Thanks @doughelton!

Two core parts of my process right now are to close a trade at 10% profit regardless of how much room I feel there is still left to run, and the other is that the Stop Loss cannot exceed $XX or 10% of the position, whichever is smaller.

Once the trade closes though, through Take Profit or Stop Loss, I continue to watch it until it stalls or reverses, and then record both the lowest/highest price it achieved.

After 30 trades, I'll collate all of the information and hopefully deduce something such as "100% of my trades went on to exceed a potential 11% profit value" and so I'll change my Take Profit in future trades.

I may also see something like "Every trade that dipped below 4% loss ended up hitting my Stop Loss value" so I could then tighten my future Stop Losses to around 4%.

I use a product called Edgewonk which does all of these calculations and graphs for me, and I whole-heartedly recommend it if you're looking for something similar.
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Doug Helton's avatar
Can you walk through an example of what it means for a Stop Loss to not exceed $XX or 10% of the position, whichever is smaller? I think I get it but an example would clarify. Doesn't have to be in a comment here but maybe a future post?
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Conor Mac's avatar
My favourite analogy will always be Graham's weighing machine/voting machine.
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Dillon Jacobs's avatar
A tale as old as time
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