You can have a good thesis and poor execution of a trade, you can have a poor thesis and execute the trade well. You are still rolling the dice with any investment and trying to predict and probability distribution and there is always the chance you will land on the left tail due to unforseen developments. Just because a trade is a loser does not mean it was a bad trade, entering into a trade stupidly is certainly a way to make a bad trade though (me with SUNE)
There is also room to make a trade bad/good via risk management and constantly keeping up to date. If you watch your investment thesis get shredded and you fail to reformulate an opinion you can not really call that a good trade even if it is a winner, you just got lucky.
MLA, I think you are right but now we are starting to talk about two difference concepts when considering good or bad trades. You are considering the harmony between intelligent trading behaviour and it’s correct fit to to the actual market movement. I am thinking from a different perspective. When do I even think about “bad” trades and “good” trades? It is in reflection when I am deciding which trading behaviour to keep and what to abandon. Bad trades = the trades made under pretense that I will be abandoning because the potential damage that could be caused. Good trades = made under pretense that I will continue to apply. This is why I think considering results of the trade to be misleading at times. Lets say you get wasted and drive home one night. You get home safe and don’t get a DUI. The results were good… but was it a “good” decision. NO!
Also, if your system is “buy high and sell low”, that obviously is not a trading rule based on intelligent observation. Yes, if you are trading on a rule based system, all trades that follow the system are "good’ in my book. However this is also under the asumption it is a system with logical foundation and thorough backtesting.
Lastly, all good trades have exit/ profit taking strategy. So of course, the action that takes place after the trade is made will be relevant to how the trade is completed. Whether or not proper exit/ profit taking procedure gets you the results you want is irrelevant. Case in point, sometimes getting stopped out for a loss is a good trade.
I disagree with both this statement and your analogy. The outcome was good so it was a good decision. However, you’re still an idiot and unlikely to replicate your results over the long-term.
Lets say I told you… Hey! I’m wasted… but I’m going to drive home right now. Would you say I am making a good decision? Results just create bias. They are irrelevant. Good decisions are those that shoud be repeated given their soild logical foundation. Case closed.
Some of you seem to think decisions (trades) are like Shrodinger’s Cat where the decision is in some nebulous region of both good and bad until you get the results and collapse the destictions of good/bad into one or the other. I don’t see it that way. I think the cat is intrinsically either alive or dead. Whether or not I check and see (get results of decision), does not change that fact.
yes. i’m at the stage in my trading career that i never stray from my overrulling strategy, not enough that it would be considered “bad” any way. that is why your definition of good and bad is irrelevant and useless to me. further, since all strategies change with time, it is hard to judge trades based on one’s stategy when strategy itself is dynamic. too much subjectivity involved in judging good and bad, that in my opinion makes it useless once again.
Being right for the wrong reason(s) doesn’t mean it was a bad decision. It should be used as a learning experience. I find you can learn much more about your winners than your losers anyway.
If you make money, and you learn something that’ll help you make more informed trades…well, seems like a nice outcome.
I don’t think any result can be inherently good/bad a priori, they can only be judged a posteriori if we are judging a decision by the eventual outcome or additional benefits, whatever those may be. But if we are only looking at the decision and its immediate impact i.e. profit/loss, only the result caused by your initial rationale can be deemed a ‘good’ decision, a favorable result due to the wrong rationable or luck does not make it a good decision.