A forum for mechanical system traders.
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walker wrote:The book Mastering The Trade has this to say on page 27:There it is, written in a book, reviewed and edited by professionals at McGraw Hill publishing company. Does that guarantee it's 100% true? Ask Oprah Winfrey and James Frey.What happens is that traders are taking a four-point profit, a three-point profit, a six-point profit, and then on the last trade of the day it goes 30 points against them. So the traders have three winners out of four but they are down on the day. And it's kind of a typical thing that'll happen for traders who are in this frame of mind of not wanting to have to go through the pain of watching a profitable position go all the way back into the red.
Many brokers actually analyze their client's accounts in order to predict when they are going to blow up. This way they can hedge the traders before the losses actually occur, essentially trading against them. The number one indicator that a trading account is going to blow up is an increase in the frequency of trading combined with the increased use of market orders instead of limit orders. Firms that hedge see this situation develop, begin to lick their chops, and fade their customer's account, taking the opposite side of every trade.