Matt Bowen
06-05-2007, 09:15 AM
http://www.mtptrader.com/MTPlogo.gif
Here is a report from Lenny Rosow (one of our Long time customers). In fact, I've known Lenny for many years as he was also one of our customers when I was working at Advanced GET. The name of Lenny's report is "Anatomy of a Trade" and it clearly shows people what it involved in professional management of trading.
You can download Lenny's report here: http://www.mtpredictor.com/Trade1.pdf
Lenny is a great stock trader as well as risk manager, he knows how a manage a portfolio better than most portfolio managers today... that's why he does it... because he knows he can make more money doing it on his own rather than handing it over to somebody else. This is also the same reason people buy a product like MTPredictor, so they can take matters in their own hands and control their own money.
Lenny put this report together to show people how he trades stocks... we did not ask Lenny to do this, he did it on his own time and it took several days to complete because he added new information as the trade progressed over 15 days. So, I want to be the first to say "Thank You" to Lenny for taking the time to share this with our members.
The point here is that Lenny is taking you through the transaction from start to finish... there is nothing fancy about this trade. In fact, this trade is very typical and shows the most important concept of trading: "Managing the trade". It's what people do after the trade has been filled that decides whether or not they win in the business of trading.
I call it a business for one simple reason... trading is a business and when you start to run your trading like a business, then and only then will you become profitable. I feel and have always maintained that trading is largely proper money management (which includes position sizing, getting the trade to risk free as soon as possible and managing the stop levels until the exit).
I was talking to one trader yesterday and I ask him what he was using for money management and his reply of: "I have a stop in my position". Clearly, this demonstrates why he is not a successful trader. Stops are like brakes on a car, do you know how many accidents happen on highways every day? Every car that's in one of these accidents has a set of brakes... so what's the problem? Just because you have brakes or a "stop on your trade" does not mean you will be risk free...YOU STILL HAVE TO MANAGE THE POSITION, because risk never goes away.
So whether you are driving a car or managing a trade, the size of your position determines your risk. Think about it, if you are driving in your car and subsequently riding somebody's ass, what happens if the car in front of you slams on the brakes? Is that not a risky position to be in? Well, what about if a trader with the same size account as Lenny didn't do the position size on this Kroger trade and decided to put on 2000 shares? What about if it gaps down after his entry? Do you see the difference? In one case a trader is taking on too much risk based on the size of his account whereas in Lenny's position he has less risk and less exposure.
Remember this: You are in the business of risk management, regardless of what anyone tells you trading is or is not, it's all about risk management and those who do it very well at managing risk are rewarded very well.
You might be wondering why I posted the logo for MTPredictor in the upper righr hand corner of this posting. I'll tell you why in a second, but first go back to the top and look at it for a second...do you see what it says:
1.) Find a Trade
2.) Assess Risk/Reward
3.) Determine Position Size
4.) Manage the trade
3 of the 4 steps (75%) of the nessasary action steps involve risk management, what I'm trying to tell you (And what Lenny is telling you in his report) is that 75% of this game is won or lost on how you manage risk. I hope you are starting to understand the importance of why we talk about risk management all the time.
One thing I would like to add to Lenny's report is that if you trade stocks you should be very aware of earnings dates and the release of earnings (as Lenny demonstrated in his report). A good source for this is Earnings.Com: http://www.earnings.com here you can check to see when your stock is due to report earnings.
Again, thanks to Lenny for sharing this report with the members of the bulletin board.
Here is a report from Lenny Rosow (one of our Long time customers). In fact, I've known Lenny for many years as he was also one of our customers when I was working at Advanced GET. The name of Lenny's report is "Anatomy of a Trade" and it clearly shows people what it involved in professional management of trading.
You can download Lenny's report here: http://www.mtpredictor.com/Trade1.pdf
Lenny is a great stock trader as well as risk manager, he knows how a manage a portfolio better than most portfolio managers today... that's why he does it... because he knows he can make more money doing it on his own rather than handing it over to somebody else. This is also the same reason people buy a product like MTPredictor, so they can take matters in their own hands and control their own money.
Lenny put this report together to show people how he trades stocks... we did not ask Lenny to do this, he did it on his own time and it took several days to complete because he added new information as the trade progressed over 15 days. So, I want to be the first to say "Thank You" to Lenny for taking the time to share this with our members.
The point here is that Lenny is taking you through the transaction from start to finish... there is nothing fancy about this trade. In fact, this trade is very typical and shows the most important concept of trading: "Managing the trade". It's what people do after the trade has been filled that decides whether or not they win in the business of trading.
I call it a business for one simple reason... trading is a business and when you start to run your trading like a business, then and only then will you become profitable. I feel and have always maintained that trading is largely proper money management (which includes position sizing, getting the trade to risk free as soon as possible and managing the stop levels until the exit).
I was talking to one trader yesterday and I ask him what he was using for money management and his reply of: "I have a stop in my position". Clearly, this demonstrates why he is not a successful trader. Stops are like brakes on a car, do you know how many accidents happen on highways every day? Every car that's in one of these accidents has a set of brakes... so what's the problem? Just because you have brakes or a "stop on your trade" does not mean you will be risk free...YOU STILL HAVE TO MANAGE THE POSITION, because risk never goes away.
So whether you are driving a car or managing a trade, the size of your position determines your risk. Think about it, if you are driving in your car and subsequently riding somebody's ass, what happens if the car in front of you slams on the brakes? Is that not a risky position to be in? Well, what about if a trader with the same size account as Lenny didn't do the position size on this Kroger trade and decided to put on 2000 shares? What about if it gaps down after his entry? Do you see the difference? In one case a trader is taking on too much risk based on the size of his account whereas in Lenny's position he has less risk and less exposure.
Remember this: You are in the business of risk management, regardless of what anyone tells you trading is or is not, it's all about risk management and those who do it very well at managing risk are rewarded very well.
You might be wondering why I posted the logo for MTPredictor in the upper righr hand corner of this posting. I'll tell you why in a second, but first go back to the top and look at it for a second...do you see what it says:
1.) Find a Trade
2.) Assess Risk/Reward
3.) Determine Position Size
4.) Manage the trade
3 of the 4 steps (75%) of the nessasary action steps involve risk management, what I'm trying to tell you (And what Lenny is telling you in his report) is that 75% of this game is won or lost on how you manage risk. I hope you are starting to understand the importance of why we talk about risk management all the time.
One thing I would like to add to Lenny's report is that if you trade stocks you should be very aware of earnings dates and the release of earnings (as Lenny demonstrated in his report). A good source for this is Earnings.Com: http://www.earnings.com here you can check to see when your stock is due to report earnings.
Again, thanks to Lenny for sharing this report with the members of the bulletin board.