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Nenix - Trading Philosophy

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In this post, i will discuss about my current philosophy for trading. I believe that a successful trader needs to have in the order of importance.
  1. A grasp on the pschological aspect (understanding the various biasness a trader might have)
  2. Money Management, the decision to determine the position sizing and the actions required for the stock.
  3. Trading System, a guiding system to ensure profitability in the long run
If I have to classify my trading style, I think I would fit under "Long Term Trend Trader". This might sound strange to some because most traders are usually synonymous with "Short term". But i beg to differ. As long as one sells a share, a trade has taken place and thus be labeled as a "trader". However, let's not go into this as it will be a never ending debate.
The rationale for adopting such style is simple:
  1. Trend is the actual indicator that shows the movement in the price. It might be due to fundamentals, sentiments, political agendas and many more, but ultimately it is the trend that will exhibit these changes. I feel that analysis (tracking) of the trend is the most important aspect of my philosophy.
  2. A longer time horizon is adopted, because if the time horizon is too short, it will lead to frequent tradings and profits might be eroded. The trade-off for this is that following a longer time horizon, I will not be able to react as quickly to changes.
By following trends, one thing is for sure, I will be able to make a profit. However, the degree of profits might not be optimal due to lag in response. This is something that I will have to work hard on in the near future.
In the future, in the process of organizing my analysis and making it more structured, it will be broken down into the various components.
  1. Trend Analysis
  2. Momentum Analysis
  3. Overall Assesment
Reproduced with permission from http://nenixdreams.blogspot.com 



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