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5 Trading Statements that Make You Sound Stupid

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Posted 28th January 2010 at 11:10 PM by Cataclysm1987

Investopedia recently did an investing article that I enjoyed, yet like most of the content on Investopedia I’m only really with it about half of the distance it goes. It was called ‘5 Investing Statements That Make You Sound Stupid’. I decided to create my own version of it only with trading. Trading is more or less the same as investing, only no one in trading is looking to hold onto assets for more than a few months to a year at a time. There are a lot of people out there who say stupid **** that pisses me off about trading, and the funny thing is I used to find myself saying the same things and well, I learned. So, without further ado, here are the top 5 trading statements that make you sound stupid…
1.”If I just follow this guy’s proven system, I’ll make tons of money!”

Okay, even I say that one sometimes, and the truth is there are a lot of damn good systems out there to put to work. The problem is, most of these novice traders just don’t understand that anyone can screw anything up no matter how foolproof the system claims to be. Even so called trading robots can crater your account if you don’t adjust trade settings correctly, so the idea that there’s any sure thing you can use to trade is just folly. A smarter thing to say might have been “If I work hard at utilizing this system, I can turn a tremendous profit assuming I don’t screw it up.”
2. “This time it’s different”

I actually commented on this the first time I posted on this blog. The whole this time it’s different mentality is just an excuse to remain in a position for longer than you are due and it ends up creating a position of risk due to lack of knowledge about the natural corrections of the market. A smarter thing to say would be, “This is a great trend, but like any other trend it will reverse some time.”
3. “This indicator can basically predict future price action.”

No technical indicator can predict future price action. The truth is they are just indicators like the instruments on a plane. They can tell you a lot about the altitude and position of the plane, but you have to actually look out and see where the plane itself is headed. Systems of analysis based on these indicators can predict future price movement to a limited extent, but not any indicator or group of indicators alone. Here’s a smarter statement to make: “When I use this indicator in conjunction with my analysis method, it’s a leading indicator of future price action.”
4. “Is this FDIC insured?”

No. You’re a ****ing idiot. Don’t ever trade. A smarter thing to say would’ve been “I should punch myself in the face.”
5. “There’s no risk in this trade.”

There is ALWAYS risk in a trade. You can control it, limit it and stop it out when it attacks you, but you cannot eliminate it, and it will always be there. Anyone who says this about a trade probably doesn’t fully understand the risks involved in the financial markets. A smarter thing to say would’ve been, “I’ve minimized my risk in this trade.”
That’s it! If I missed any, feel free to post ‘em in the comments and let me know.
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