TheRumpledOne
6,407 posts
msg #47022
- Ignore TheRumpledOne |
9/18/2006 7:37:10 AM
ETR Insider Report: My Favorite "Game"
By Rick Pendergraft
Perhaps it's my competitive nature. Or perhaps it's because every day is different in the investment markets. Regardless of the reason, trading is certainly one of my passions (ranking right up there with college basketball).
I love competing in just about any type of game, whether it's poker, golf, or Trivial Pursuit. And I am always out to win, regardless of who I'm playing against. I used to joke that if I were playing my grandmother in a basketball game, I'd try to trounce her just as badly as I would a total stranger. (She is at least a foot shorter than I am, which makes it a lot easier.)
Investing is like a game where the score is kept in dollars. You may not be competing against others directly, but it's still a competition. You are competing to have more money at the end of the day than what you started with.
Winning at the trading game is similar to winning at basketball, because it takes a good defense to be a champion. It's rare for the highest scoring team in the country to be among the top ranked teams.
With trading, you have to protect what you have before you can go on the offensive. Think of your savings as your first line of defense. You shouldn't be trading if you haven't got enough.
Other ways to defend your portfolio are to take profits along the way (don't get greedy), to diversify, and to not allocate too much money to any one trade. If you protect your downside, the upside will take care of itself.
Most people would agree that it is more fun to be on offense than to play defense. If you doubt me on this one, try coaching youth basketball. (I've been coaching basketball for 20 years, and few kids prefer defense.) Only when you've done your job on defense and stopped the other team should you reward yourself with "offensive plays."
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