You know the difference between winning and losing trades -- we've all experienced both and know the joy and the pain well.
With trading losses, the majority of the time the shortfall comes from the trader and no the trading strategy.
Well, yes there is a good chance this described you. In this article I will talk about ways to change all that. Your stop loss order is a really good place to start, this should be decided before you place an order.
You can't delve into the topic of position entry thoroughly without speaking of stops. The question is, "Why are stop losses used by so few investors?" If not using stops is a weakness for you then you want this info. This info could mean the difference between on time retirement with a fat nest egg or just 'getting by' at a later retirement date.
By planning and placing stops you plan to win, but prepare to take losses and still live to trade another day. So we need to look at the trader psychology around taking losses.
Every pro trader has to have a point in their minds denoting when they will get out, before they will get in. This has to be known before hand so that when the moment comes they can get out quick. This is a down-home basic knowledge the each pro-trader has to have.
Are you able to respond to these questions?
1.) What are the indicators for staying put, or getting out?
2.) When a stock is losing, do you have a guide that lets you know when to sell?
3.) Do you have a rule of when to move your stop to break-even?
If the answers to these questions elude you, you are not unique. What it says though, is that you need to get some regulations set for yourself, particularly when going to short stocks. But these trading rules won't amount to a hill of beans if they aren't used. If you aren't using them you need discover why it is you don't manage your risks in a professional and non passive style.
There are 2 base reasons why Investors won't take a loss:
1. Admit they are wrong? No Way!
Though not really avoidable, a loss is seen as a personal failure. This is a painful thing to admit for a large portion of traders, like it illustrates failure at life. It also takes away from their positive self image.
A trader like this experiences real pain from the loss, and would rather deny it than fess up to the fact that it is giving them the pain. Quite often it requires a total loss before he can begin to change. To quit trading is the only other alternative.
2. Taking that large of a hit would damage their portfolio greater than it can recover from.
The loss is a real loss, it is not solely on paper, the stock/bond option has the value of the quote, even if you don't see it.
Both of these examples are a form of self-delusion that millions of investors, both large and small, suffer from. Just look at AIG, Merrill Lynch, WAMU, Lehman, etc. ... and you can take comfort in the fact that self-delusion is no respecter of income bracket or social standing.
Are you feeling uncomfortable with what I am saying?... or powerless, or angry? Good! That is a sign that you are capable of making the changes you need to.
A winning trader will have a different view of losses than a losing trader. He doesn't take it personally. He takes it as a sign that he needs to revamp his approach or execution no that it is a sign that he as a person is lacking.
Separating themselves from what they are doing is what a winning trader does. Either they know it or learn that the problem is either in their approach or their skills not in their worth as a human being. Changing the pain of a loss into a motivational factor that increases their quest to be a better trader.
Both are learned responses and within your control. The opportunity for growth from the pain of losses is the same. It's what we do with the emotional pain of a loss that matters, not the loss itself.
Stick with my proven ETF Trend Trading system and make winning a habit. Study; ask questions and monitor your position size relative to your portfolio and you will end up on the winning side more often than not.
My constant reminders about proper stops and risks are one of the strongest parts of my one year mentorship program. Even after you understand my system 100%, it's still good to hear me tell you, "Don't move your stop" or "Be sure to take profits when the system says to, not too early and not too late." Most my students like the mentorship part as much or even more than the course itself. - 23309
With trading losses, the majority of the time the shortfall comes from the trader and no the trading strategy.
Well, yes there is a good chance this described you. In this article I will talk about ways to change all that. Your stop loss order is a really good place to start, this should be decided before you place an order.
You can't delve into the topic of position entry thoroughly without speaking of stops. The question is, "Why are stop losses used by so few investors?" If not using stops is a weakness for you then you want this info. This info could mean the difference between on time retirement with a fat nest egg or just 'getting by' at a later retirement date.
By planning and placing stops you plan to win, but prepare to take losses and still live to trade another day. So we need to look at the trader psychology around taking losses.
Every pro trader has to have a point in their minds denoting when they will get out, before they will get in. This has to be known before hand so that when the moment comes they can get out quick. This is a down-home basic knowledge the each pro-trader has to have.
Are you able to respond to these questions?
1.) What are the indicators for staying put, or getting out?
2.) When a stock is losing, do you have a guide that lets you know when to sell?
3.) Do you have a rule of when to move your stop to break-even?
If the answers to these questions elude you, you are not unique. What it says though, is that you need to get some regulations set for yourself, particularly when going to short stocks. But these trading rules won't amount to a hill of beans if they aren't used. If you aren't using them you need discover why it is you don't manage your risks in a professional and non passive style.
There are 2 base reasons why Investors won't take a loss:
1. Admit they are wrong? No Way!
Though not really avoidable, a loss is seen as a personal failure. This is a painful thing to admit for a large portion of traders, like it illustrates failure at life. It also takes away from their positive self image.
A trader like this experiences real pain from the loss, and would rather deny it than fess up to the fact that it is giving them the pain. Quite often it requires a total loss before he can begin to change. To quit trading is the only other alternative.
2. Taking that large of a hit would damage their portfolio greater than it can recover from.
The loss is a real loss, it is not solely on paper, the stock/bond option has the value of the quote, even if you don't see it.
Both of these examples are a form of self-delusion that millions of investors, both large and small, suffer from. Just look at AIG, Merrill Lynch, WAMU, Lehman, etc. ... and you can take comfort in the fact that self-delusion is no respecter of income bracket or social standing.
Are you feeling uncomfortable with what I am saying?... or powerless, or angry? Good! That is a sign that you are capable of making the changes you need to.
A winning trader will have a different view of losses than a losing trader. He doesn't take it personally. He takes it as a sign that he needs to revamp his approach or execution no that it is a sign that he as a person is lacking.
Separating themselves from what they are doing is what a winning trader does. Either they know it or learn that the problem is either in their approach or their skills not in their worth as a human being. Changing the pain of a loss into a motivational factor that increases their quest to be a better trader.
Both are learned responses and within your control. The opportunity for growth from the pain of losses is the same. It's what we do with the emotional pain of a loss that matters, not the loss itself.
Stick with my proven ETF Trend Trading system and make winning a habit. Study; ask questions and monitor your position size relative to your portfolio and you will end up on the winning side more often than not.
My constant reminders about proper stops and risks are one of the strongest parts of my one year mentorship program. Even after you understand my system 100%, it's still good to hear me tell you, "Don't move your stop" or "Be sure to take profits when the system says to, not too early and not too late." Most my students like the mentorship part as much or even more than the course itself. - 23309
About the Author:
Learn how it's very possible to make 6% per month in your investment accounts using etf trading! "Big A" is a recognized expert in the world of etf trading system & reveals trading & investment secrets that have been kept under wraps by hedge traders for years. Get his free report & webinar today!
No comments:
Post a Comment