Stock Preacher

Successful traders always have a plan and follow it.

Traders who fail do not have a specific plan, they enter and exit with out reason or they enter and then do not exit until losses are painful.

In short, the unsuccessful have no exit strategy, or if they do, they do not follow it

Successful traders wait until the trade comes to them, they do not force the trade. Rather they exercise discipline and ignore that temptation that always suggests: “let a loss run just a little more, it will come back.” The fact is that: the loss that runs just a little more often runs a lot more. Read more

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If you cut your losses at 8%, it will always allow you to survive to invest another day. I have seen people go bankrupt or ruin their health because they’d fall in love with a stock, could not face up to and admit mistakes, and couldn’t make the hard sell decisions. Vacillating when it comes time to sell is how you will sooner or later experience big losses. And big losses will cause you to lose your confidence, which you absolutely cannot let happen if you expect to continue investing.

If you are worried, the old adage, “sell down to the sleeping point,” is the best way to relieve some pressure. You don’t have to sell it all, just sell something so you can sleep at night.

If you cut all your losses at 7% or 8% below your purchase price, and then sell just a few of your stock when you’re up 25% to 30%, you can be right once and wrong twice and still not get into trouble.

Your best-performing stocks should be held longer for a larger possible profit. Always sell your worst-performing stock first, not your best performing stock.

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Most important things an Small-cap Stock Investor should know?

Tom was a highly successful Small-cap Stock investor and preached cutting all his losses short. And for us, this is rule #1. You mush always protect your investment account. Particularly if you invest or margin (use borrowed money), cutting losses is absolutely essential.

Whether you are new or experienced investor, the hardest lesson to learn is that you are simply not going to be right all the time. And if you don’t cut every loss quickly, sooner or later you will suffer some very large losses. I have known seven highly intelligent, educated men in their 40s who were wiped out because they invested on margin and had no sell discipline. Brain, education, ego, stubbornness and pride are deadly substitutes for having and following sound selling rules.

The problem is, you always hope to make money when you buy a stock. And when you have to sell and take a loss, you find it gut-wrenching and hard to admit you were wrong. You’d rather wait and hope the price will come back.

To make matters worse, when you do try to cut losses, half the time the stock will turn around and go back up in price. Then you are really upset. You conclude you were wrong for selling and that the loss-cutting policy is a bad one.

How you think about losses is critical. Historically, this is where most investors go wrong and get confused.

Ask yourself the following: Did you buy fire insurance on your house last year? Did your house burn down? If it didn’t, were you upset because you wasted your money on the insurance? Will you refuse to buy fire insurance next year? Why do you buy fire insurance in the first place, because you know your home is going to burn down?

NO! You buy insurance to protect yourself against the remote possibility you could suffer a major loss that would be difficult to recover form. That’s all you do when you cut short your losses.

Tom was a highly successful Small-cap Stock investor and preached cutting all his losses short. And for us, this is rule #1. You mush always protect your investment account. Particularly if you invest or margin (use borrowed money), cutting losses is absolutely essential.

Whether you are new or experienced investor, the hardest lesson to learn is that you are simply not going to be right all the time. And if you don’t cut every loss quickly, sooner or later you will suffer some very large losses. I have known seven highly intelligent, educated men in their 40s who were wiped out because they invested on margin and had no sell discipline. Brain, education, ego, stubbornness and pride are deadly substitutes for having and following sound selling rules.

The problem is, you always hope to make money when you buy a stock. And when you have to sell and take a loss, you find it gut-wrenching and hard to admit you were wrong. You’d rather wait and hope the price will come back.

To make matters worse, when you do try to cut losses, half the time the stock will turn around and go back up in price. Then you are really upset. You conclude you were wrong for selling and that the loss-cutting policy is a bad one.

How you think about losses is critical. Historically, this is where most investors go wrong and get confused.

Ask yourself the following: Did you buy fire insurance on your house last year? Did your house burn down? If it didn’t, were you upset because you wasted your money on the insurance? Will you refuse to buy fire insurance next year? Why do you buy fire insurance in the first place, because you know your home is going to burn down?

NO! You buy insurance to protect yourself against the remote possibility you could suffer a major loss that would be difficult to recover form. That’s all you do when you cut short your losses.

Popularity: 1% [?]