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BIG GAINS.
SMALL LOSSES.
We’ve all heard it before, “You’ve got to cut your losses and let your winners ride.” The trouble is, it’s true. More than any other single factor, the individual investor is handicapped by the tendency to tolerate losses while nervously grabbing gains off the table early for fear of losing them.
Think about it.
Have you held on to a loser too long in the hope of it one day recovering and then finally thrown in the towel when the loss became intolerable?
On the other hand, have you made some nice gains and then gotten nervous
during a pullback and sold for a small profit (or worse a small loss!)
only to then watch the stock take off to new heights without you (and
now you’re reluctant to jump back in it)?
It happens over and over again. The net result is big losses and small gains. One way or another, this equation has to be reversed.
MAKE A PLAN
You’ve got to have a plan and you’ve got to have it before
the heat of the moment. Moreover, it’s got to be a simple plan,
one that you can understand and one that you believe in. Otherwise you
won’t have the conviction to follow it.
TradeStops is here to help.