I was asked to post this:
Your Ego Has No Place in Your Trading
By Dan Fitzpatrick
Special to RealMoney.com
11/07/2003 10:47 AM EST
Click here for more stories by Dan Fitzpatrick
Technical Analysis
Computer Sciences may have found its top.
Dell appears ready to move higher.
PetsMart may be about to reverse.
One of the nice things about trading from a technical perspective is being able to work on separating your ego from your actions. I think this is good because as a man, that doesn't come naturally to me.
For example, I don't like to ask for directions when I am lost. I'll drive around interminably rather than admit I don't know where I am. I refuse to balance my checkbook; instead I keep thousands of dollars in a non-interest-bearing account rather than go to the trouble of keeping track of my deposits, withdrawals and checks. (I know about overdraft protection, but that would be too easy.)
Paradoxically, I choose to trust that a financial institution will not make a mistake balancing my account, even though I read story upon story about these same institutions inadvertently messing up their own balance sheets. Also, I never read the directions when putting something together, be it a toy, a barbeque or a major appliance. Regardless of the number of parts in the box, I'm confident I can put anything together without the aid of the written word.
So with these shortcomings in mind, I am constantly on my guard against letting my ego affect my trading. As soon as I start believing I know more than the market (as illustrated by the charts I study), I've totally lost my edge and am about to become a loser. There's no better way to describe it than that.
Today, let's look at Nevada Gold (UWN:Amex - commentary - research), Computer Sciences (CSC:NYSE - commentary - research), Dell (DELL:Nasdaq - commentary - research), PetsMart (PETM:Nasdaq - commentary - research) and Provident Energy (PVX:Amex - commentary - research
Why was I bringing up ego and trading? Because I last mentioned this stock almost a month ago when it was selling off after having held it for most of the year. Nevada Gold had been a long-term hold of mine, and I had been very bullish on it. But when the weak hands began selling because the "Governator" was elected in California and there was fear that the Indian casinos would all be forced to pay state taxes, I dumped the stock as a function of discipline. Yes, I know conviction is important, but I learned that you don't let paper profits turn into real losses.
With that said, you don't remain totally inflexible, either. I sold when the stock dropped beneath the 50-day moving average. But when it refused to stay there for very long, I exercised a trader's prerogative -- I changed my mind. I'm long again.
The stock is now flying a flag at half-mast. My target on the stock is about $15.
>>etc etc
a lot of charts |
