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Mastering The Art of Investment Trading
by Jimmy Cox
If you're comfortable with and making better results in your trading portfolio why don't you use the same method in your superannuation fund? Also do you calculate your stops differently in your super than your trading fund? This interview between two expert traders, Stuart McPhee and David Jenyns, will give you some important insight.
Stuart: I appreciate where that person is coming from, but to me they are so different, two completely different aspects of investment trading. Probably the biggest difference between the two is the amount of money in both. I have a lot more money in my super fund than my day to day trading fund. The purpose of both those funds is so different.
My investment trading fund, as much as I don't want to, I could afford to lose it tomorrow. It wouldn't ruin me. The last thing I want to do is lose all the money in my super fund. I am so conservative and so defensive and thinking much longer term in my super fund than I am in my day to day trading fund. So completely different purposes and to me they require completely different approaches. The size of a trading fund does affect your whole approach to trading. Whilst all the same rules of effective trading apply, most notable nipping losses in the bud and letting your profits run; you have adapt the way in which you apply those rules for maximum benefits and profits.
I want my super fund to grow and grow so when, by law, I'm able to tap into it, it's all there and will set me up.
The question was asked about setting stops differently. We all have the same rules of cutting losses and letting profits run, but the way we apply those rules across the different trading styles is very different. So of course I use very different stops in my super fund, and one wouldn't work for the other.
David: Are you using the same method of calculation on your super fund as your CFD trading fund? Obviously the width is going to be different, but are you going to be using the same method of calculation?
Stuart: The same method, no. I use a volatility base for my super fund and a technical stop for my short term trading. Investment trading often calls for different methods to be profitable. We have to be able to adapt our trading style to match our individual circumstances.
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