Stock Trading Quick Tip: The Math Trap

Watch as ClayTrader presents a Stock Trading Quick Tip. In this tip ClayTrader touches on "The Math Trap" a simple concept that is often overlooked when learning to trade stocks. Check out this quick tip as well as other videos from ClayTrader.com to improve your stock trading and technical analysis skills. The Stock Trading Reality Podcast - http://claytrader.com/podcast/ Join My Private Trading Team - http://claytrader.com/join-the-trading-team/ Learn to Trade Without Emotion: http://claytrader.com/store/ Follow Me: @ClayTrader25 Like Me: https://www.facebook.com/claytrader25 Add Me to Your Circle: https://plus.google.com/113644547732955130822/posts ClayTrader.com and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever and we are not qualified to give financial advice. Investing/trading in securities is highly speculative and carries an extremely high degree of risk. Compensation Disclosure: ClayTrader.com has NOT been compensated for this video in any form and does not own any shares (long or short).

Comments

1. So from a risk management perspective its always better to go short rather than long?
2. I live in michigan too. I'm in the game now.
3. I live in Michigan to. great videos man.... GO SPARTANS:)
4. nice one i can of like your video,its cool.
5. I always knew math was a trap. In all seriousness, thanks for the videos!
6. I think that was very simple, and I think it trys to imply patience. Can you answer this question? When will we know when a stock ever hits its true "5" Thank you!
7. Don't get too excited. For a price to go from X to X+10 is as easy as from X+10 to X. The market (people) raises the price from X to X+10 because the market thinks this is the right price, not because people think it is right to raise the price by 10%.
   
   The percent scale is artificial. You could have just the same use a logarithmic scale or any other scale. It does not change the fact that the price has shifted from X to X+10 or vice versa.
8. Wow I've never looked at it this way. Makes a lot of sense. It's a really simple concept applicable both in trading as well as in life. Thanks for uploading :)
9. claytrader, i'm an engineer graduate too and hey i think probability and statistics can definitely give you equations to the risk management, but it sucks for me i hate that subject so i just stick with the psychology of the price action hehe
10. I enjoy watching your videos and have learned quite a bit. My question to you is, where do you trade. What is the site? I have a TD Ameritrade account and dont understand how to use it properly. They also chrge 9.95 per trade. What can you tell me?
11. Hat happens if you concentrate on selling short..... Does the principle Change or reverse? .... Sorry I'm very new!
12. to clear things up, he's saying that 50% of 10 is not the same as 50% of 5. a loss of 50% of $10 is $5. a 50% gain of $5 is $2.50. Therefore, you need a 100% gain to reach back up to $10. That's why in trading, your primary concern is percentage. Yes, they are displayed for a reason
13. Nice video man really helps!
14. pIECE OF SHIT
15. Wow, that is weird
16. opinions on forex?
17. What is the best app you recommend?
18. Best way to get out of this is? Lol please do a video on it....
19. this isn't really true, but trading with this logic is still important for making gains happen more often than losses. This implies that prices move down easier than they move up. which means the market would endlessly be crashing. but again, this is still a nice way to think to increase your odds.
20. I don't believe this is true. Math does in fact dictate that to offset a decrease of some percent, you need a much larger percent increase. Math does not dictate that you should think about price changes in terms of percents -- that's a choice the author made! The author offers no explanation for why we ought to think of price changes in terms of percentage change rather than absolute price change (in dollars).
    
    In addition, stock prices are not at all like rocks falling down a hill. The stock market as a whole, on average, move slowly up over the long haul, which is exactly the opposite of the way rocks move.