So, should I be spending my afternoons trading short-term positions or reading research? Should I be entering trades with as tight a stop as possible, or are medium-term views consistent with longer stops? Should I be waiting for a clear buying opportunity or buying at the first sign of a technical breakout in order not to miss trades? Should I be making so much use of breakouts or should I also use momentum indicators?

At the moment, the answers are: research, tighter, clear opportunity, breakouts not momentum. Clear opportunity and tighter stops go together, and I need tighter stops in order to get the leverage I need to make high-enough returns to keep me in business. I am not a pure technical trader so I have to do research — using fundamentals while pretty ignorant would be a bad combination. I much prefer breakouts because the rest of the market can see them; I suspect most of the market is not watching clever momentum indicators. Also, breakouts allow for tight stops, whereas buying on a turn in momentum would require a wider stop.

So much is driven by the stop position — I knew this was important, but I hadn’t appreciated how much it drives the whole style of a trader. I didn’t ask about this in nearly enough detail when I was talking to hedge fund managers.

On top of all this, the question that is really bugging me is: will the style I am using, even if executed well, allow me to make high-enough returns? I have to remember that the answer to this and every other question will be resolved in time; for now, my main focus should be on learning and avoiding being carried out.

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