Page 476 - THE MARKET WHISPERER

472 PART 14 - The Demons Are Coming!

you’re still holding onto it is… ego. You’re not ready to admit that buying
it was a mistake. So own up, and tell yourself that the stock is not doing
what you thought it would. Within ten minutes, you should have been
seeing one or the other, profit or loss, but not continued sideways
movement. If the stock hasn’t decided which way it is going, both
options are still open. That means there is a 50% chance of profiting.
But also a 50% chance of losing! Give up on the trade and devote your
attention to another stock. Free up important screen space, free up your
buying power, and don’t look at that stock again. In fact, perhaps more
importantly, free up your mind to concentrate on something that isn’t
stuck in place. To do so would be no more than an irrational gamble
rather than a considered, careful decision.

The Top Ten: 10 Things Failing Traders Say

1. I don’t want to realize a loss.
Every huge loss started out as a small loss. Your exit plan must be clear. Be
disciplined and stay with it. Most traders encounter their psychological
issues when they need to stick to a stop loss which seemed very logical
before it started moving in a losing direction, but now looks eminently
movable “just a little bit…”

2. I’ll wait until the losing stock recovers to my entry price.
Duh… as though the market cares if “your” stock is ever going to recover!
You know what? For the sake of the argument, let’s say it does recover.
Presuming your investment is limited, you are tying up good money to
a bad stock and losing out on other opportunities. Get out, forget about
it, and focus your attention on more beneficial options. Losses happen.

3. If I don’t sell now… it’ll go down!
It’s well known that inexperienced traders sell winning stocks too
quickly and exit losing stocks too late. Instead of selling a good stock
fast, take a partial and raise your stop loss on the quantity that’s left.
Stay with a stock showing a winning trend.

4. I lost $100 on ABC, so I realized a profit of $100 on XYZ.
Since when does a loss on one stock have any connection with success
on another? Manage your winning stock and forget the loss on the
other (despite the psychological difficulty), no matter how fresh that