Forex Media News Station

2009/10/23

The Wall Street Fool

[The following was taken from p.183-184 of Sentiment in the Forex Market (2008) by Jamie Saettele.]

WHY MOST TRADERS LOSE

There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying and selling...

—Edwin Lefevre, Reminiscences of a Stock Operator

(John Wiley & Sons, Inc., 1923, p. 31)

This quote from Reminiscences of a Stock Operator warns of one of the mistakes most responsible for a lot of lost money: over-trading. The only time to trade is when the odds are in your favor.

A simple way to solve an over-trading problem is to take a longer-term approach. Begin by trading end of day prices. Once you feel confident and disciplined enough, move to intraday charts but always determine your bias from a daily chart or higher. Determining a bias from a daily chart and confirming it with the wave pattern from the intraday charts works well for me.

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