A good reason to keep trading is that these people will, and they dont know what there doing.

No good investor averages losers (saying Buffet does is like always talking about Jordan when it comes to Basketball), but even if some do, no (NO!!) good trader does. But there is a second problem here, why is he asking his broker???

Good luck

If you are not on margin and you really know your stuff you should average down. Problem is, only few qualify. Buffett does, Bill Miller not: swam naked when the tide finally went out.

On Gartmans rules: One can also bleed to death by getting out of too many trades too early. Gartman can always sell his letter; a trader has to get some trends right.

All trading rules are interesting but it is everyone for himself: it comes down to psyche, what you really know and how far your mental and financial reserves stretch.

Suggest he read:

Rules of Trading from Dennis Gartman
http://www.frontlinethoughts.com/printarticle.asp?id=mwo012006

When I was in Caracas (for a grand total of a day and a half on a project), I heard an expression that seems to epitomize the behavior of your relative:

They have changed their minds, but they haven’t changed their hearts.

And I have to commend you for trying….

Recently, he sent me a bullish “buy the dips” dispatch from his asset manager (for all the worst offenders of the equities of course). This is a serious high net worth management shop.

He was curious to see what I’d say.

I spent a few hours going through point by point and completely demolished the report. Totally and utterly, using actual data.

He was sort of stunned, but soon after told me “I think you are right, or at least, there is something seriously wrong with the market and it is no longer safe; I’m already losing lots of money… but…

… but I cannot change my ways.”

Then went on about life just being tough (which I agree with, but it will be tougher if you aren’t adaptable).

I think there is a lot of this “psychological momentum” effect going on out there, drawing out the reckoning (but not, of course, eliminating it).

That is interesting. Some proposed remedies for securitized credits call for the originator to retain a piece of the deal, usually the equity. I recall thinking, “gee, wasn’t that done a fair bit of the time,” and went on.

Someone needs to tell the Powers That Be that we tried that one and it didn’t work….

When the market tells you that your trading idea is wrong, cut your losses. Never forget – the market is right, you are wrong. You can always put the trade back on later, but you can’t have a clear mind about a trade when you have it on.

The best traders I know lose money on 60+% of their trades. But they keep those losses small on a per trade basis. When they are right, they ride their winners.

Dollar cost averaging. Nonsense.