The Turtle on Swing trading...thanks ET...
Swing trading is the most difficult thing for most investors to do profitably. In fact the statistics show that most people lose money doing it. You need incredible discipline to ignore a falling share price and avoid the inevitable pressure to sell the low (ie flight in the "fight or flight" reaction). Most people prefer to avoid danger than to fight it - that's how we've survived as a species!85% to 95% of traders lose depending on which study you look at, but the vast bulk of long-term holders win, especially if they have a well-diversified portfolio of stocks which have more upside than downside and which are held when the share price is below your valuation level.All of those things mean that, for me, Meso is a relatively low risk play within a portfolio of stocks and it could significantly enhance the overall return of the portfolio.Why do people sell the low? Well that's when the pressure for flight is at the most difficult to withstand - almost by definition - it won't make a low until the bulk of nervous sellers have exited. Many of those sellers have no choice because they are over leveraged and not diversified for their own risk profile and face financial ruin if their one highly leveraged stock continues to fall - so they sell and create the low.That's why the major problem in investing is knowing yourself - understanding how you will react to such pressure and whether it might be wiser to mitigate the chances of it going wrong, or avoid the mess altogether.My personal solution is to know how much risk I can stand (I don't deal in derivatives on this or any other stock), I don't leverage in any way, I know the sensitivities of the share price and the company's performance and I combine it with other investments in a way that means I won't be destroyed by a big move down and forced to sell the low.Likewise, the most people buy the high due to our human/animal herd mentality - if most people who are likely to buy haven't yet bought, then it's not the high yet (given all the info currently available - publicly or not!).If people's tendancy is to buy the high and sell the low, then I don't recommend swing trading. Some traders can do it, but they are unusual individuals who have human reactions which are a bit autistic. They aren't the sort of people you'd want to have a beer with at a backyard BBQ, and they probably wouldn't want to be there anyway. I have met many people who claim to have great wins on the market and to be able to beat the usually very disciplined fund manager set. They usually talk about a stock they've made a killing on - then you go deeper and they admit they hold less than 5 stocks and one of them has gone close to bust, a couple have underperformed the index, one is in line with index and the big winner is carrying the whole portfolio - problem is that when you add it all up, the total return is usually a bit below index performance and that's before taking tax, transaction costs and wasted time and emotional scarring into account. I had one friend who left his senior management job with a tech company to trade shares - he was going to trade from home and reduce the stress in his life - my advice to him as a friend was "don't do it" - it cost him his retirement savings, his house and his wife and kids (at least the wife kept half the house because the divorce went through before the trading losses wiped out everything).You might say that could all be avoided by stop losses - they don't work though if you get stopped out after a nasty price fall (see MSB stops at $2 which sent it down to $1.75) then after the price pops back up, you buy back in with a stop - then it falls again and you get stopped out for another small loss - a succession of small losses still equals a disaster - it is just slower moving pain and stress.I believe the market is uncertain and that the only way to "win" is to work with the uncertainty. Swing trading requires you to be right in the short term, which is the hardest period of time to predict, and in fact is usually a random walk between announcements - so you should be right 50% of the time, however human nature and "flight" reduces the number of people succeeding from this strategy to only 5-15% - the winners are the disciplined long-term investors and the instos.
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