Nagarian once said that before I set up any trade, “I slept as sweet as a baby. When we entered the market to establish a large position, the odds were usually very high, because we have already done our homework in advance, very confident. When we make a mistake, we cut down, confessed, and then proceeded.”
“Some traders hire professional players or professional gamblers. We value card counting skills. I don’t think this is gambling. When we go to the casino, the purpose is to work. Only when we have our own odds, we sit on the table. We have several trading units that can collect several decks. When we enter the market, we want to have the highest odds. The same is true for trading. When the opportunity comes, we will count the cards, pre-planning the subsequent plans, and calculating as much as possible. We have the advantage. There are a lot of cards on the table. If important earnings reports are about to be announced tomorrow, Morgan, Lehman or Salomon tend to buy in large quantities. We may have the advantage of information, so we must control the risks, follow Let’s bet in the direction.”
“I think the odds of stocks rising and falling are similar. Just like the abacus veterans in the casino, we observe the long-term chart and calculate the price pattern at that time. Before betting, we will pre-evaluate whether the profit potential is higher than the risk of loss, so the total It is a good chance of winning. However, observing the graphics itself is not enough. The shipwreck on the seabed has a bunch of nautical charts. So we can’t just rely on the graphics.”
“Secondly, we observe the buyer and the seller. Similarly, in terms of derivative transactions, we observe Salomon, Morgan Stanley and Lehman. If we keep buying a stock, we know that we are betting on the market. We collect all the information. If the price pattern on the chart is very good, the institutional buying will continue to enter the market, we must also consider – is there any news? Is the earnings report to be released soon? Are all the comments very favorable? Is it coming soon? Introducing new products? Is there a legal lawsuit that will be pronounced? After a comprehensive evaluation, we actually have a bet that we have a significant odds. Many people can’t master this type of information, so we need to make ourselves bigger. The odds of winning.”
Few people will imagine professional traders who are at risk and tie their seat belts, not to mention top traders. However, it is the characteristics of excellent traders that hate risk and safety first. Therefore, when Najarian entered the establishment site, he required that the profit potential must be much greater than the potential loss, even if the transaction is very unlikely to occur.
“The lowest risk/reward ratio I can accept is 1:1, but it’s usually 2:1 or 3:1. If I buy a stock at $30 and I’m at $35 for the upper target, then stop the loss. Must be able to set at $29 or $28, so that the profit potential is several times the potential loss. If my opinion is wrong, I will make a decision and move on.”
“If you judge that the correct profit is only $5, you can’t say: ‘If you make a mistake, I am willing to hold the stock down to $20.’ Otherwise, the trading career may be short-lived.”
“I definitely don’t accept the big potential risks. Even if I think the stock price is not up, I can’t bear the downside risk of $10 in order to get a profit of $5. This is an unacceptable risk.”