Reblog: How to Cut Losses and Let Winners Run


Loss Aversion – Cut Losses Short & Let Winners Run

If you’ve been trading for a while, you’ve probably heard the following ubiquitous mantra of trading: “Cut Your Losses Short & Let Your Winners Run”.

Why Should You?

Stocks can literally go to zero. It happened many times before and will happen in the future, regardless of how big the company is.

MANY oil and coal companies recently filed for chapter 11 bankruptcy and their stocks got delisted. You may also remember Lehman Brother and General Motors. What happens when your stock falls off a cliff and gets delisted? You simply lose all the money you invested in that stock.

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Reblog: How to Maintain Control and Discipline in Your Trading


If as a TRADER you want to have disciplined and profitable trading, The Core Concept you need to Understand is

As a Trader, you do not have any control on the market.

Nil Control on Market

You’ve either figured out or you will figure out the fact that not much at all remains under your control as a trader. Dealing with an endless set of variables using a mind that’s geared by nature to defining constants is a tough task.  Most of traders focus on returns and not focusing on the process of trading.

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How to avoid disastrous stock declines


A common phenomenon that happens to all investors. Having bought a stock, how do we handle declines? Here are a few thoughts and ideas posted from the blog post that originally appeared here. While these may be talking about US stocks, the underlying philosophy applies to all investors be they in New York or London or Singapore or even in Mumbai.

  • Avoid falling in love with a company or its stock. The emotional attachment will cloud your judgement and prevent you from making sound decisions in the market. The “pet stock” phenomenon occurs more often than you may think.

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