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Strategies & Market Trends : Your Worst Trading Enemy.. You
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To: shawnwolff who wrote (36)1/16/2001 12:52:11 PM
From: Fun-da-Mental#1  Read Replies (1) of 223
 
Sure, hindsight is 20-20. Maybe it sounded like I was saying "I wish I had held the stocks that did well and sold the stocks that did badly." What I meant was I picked more winners than losers, and yet I managed to lose money because I felt a stronger attachment to the losers than the winners. That's why I would have done better just to hold everything. That would have saved me from my two main mistakes: bailing on winners and averaging down on losers. Of course this is not the best possible strategy, but it's better than what I was doing.

Another way to put it is that my thinking is clearest BEFORE I enter a trade. Once I am holding I become emotionally involved, so I need to be skeptical about the thoughts that come into my head then, and not react right away. Of course I still should respond to new developments, but not get caught up in a spiral of second-guessing. The time I was losing the most was when I was trading the most. (I am speaking as a long-term trader. Maybe for daytraders it is different.)

Also, I'd like to say something more about my state of mind when I was losing. A lot of people talk about the pain of losing money, but I had the opposite problem. I didn't feel pain. I didn't take it seriously enough. I preferred to tell myself it would be okay and forget about it. This just enabled me to dig myself deeper. I don't know but I imagine this is probably how a gambler feels while he's blowing his life's savings at a casino.

Fun-da-Mental
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