The biggest mistake I have seen people making in the stock market is not getting out when they are wrong. Instead they allow a trade they are in to pull back 50% or more if things turn against them. The larger you let your losses get the shorter you will be trading the market. Here are the top 3 reasons to cut your losses short.
1. Trading is a Business.
Trading in the stock market is a business; your capital is the lifeblood of your business. If you let the loss on 1 trade get too big you will not have any capital left and therefore you will not be able to make any money.
So protect what you do have, that has to be your main focus.
2. Emotions run wild
Everyone gets into the market trying to make some good money. I have not seen anyone who has gone into the market trying to lose everything. So when you do first experience your first big loss it can be hard to handle.
It is very upsetting to see your account actually shrink especially when where planning on it growing into millions. It is hard to handle losses so keep them small. The smaller you keep your losses the less it will affect you.
3. The Less you lose the less you have to be right
If you lose 50% of your account you have to get into some pretty big winners just to break even again. And if you get into another losing trade after that, well your account is going to be negative for a long time.
If you only lost 2% of your account on 1 trade that is easy to make up. 1 big winner can easily pay for several small losses and then some. Obviously you still want to be profitable as often as possible, but if you only need to be right 40% of the time to be profitable it is much easier to get that then if you have to be right 90% of the time.
Saturday, March 28, 2009
Top Reasons to Cut Your Losses Short in the Stock Market
by:
yestom
time:
2:31 AM
label: Stocks and Bonds
Subscribe to:
Post Comments (Atom)
Subscribe
Labels
- banking (1)
- Financial ETFs (8)
- Gold buffalo coin (12)
- Gold investment (44)
- Gold Investment Guide (17)
- Investment News (6)
- mexico gold coin (10)
- others (47)
- Retirement Planning (30)
- South African Gold Krugerrand (13)
- Stocks and Bonds (40)
- Trading Results (1)
- Wealth Building (35)
Followers
Blog Archive
-
▼
2009
(207)
-
▼
March
(180)
- 1930s Volatility is Here
- 5 Stock Tips to becoming a Successful Trader
- What is an ETF?
- 3 x ETFs, the Latest hit
- Inverse ETFs, Should You?
- What are ETFs
- What is a good investment
- Reasons For Selling Options
- Signs of a bottom
- Zacks Beats The Major Brokers
- Are Chipmakers Finally Stabilizing
- Real Estate Investing - The Benefits from an Exper...
- TOP 10 INVESTMENT SCAMS IN WASHINGTON
- Current Economic Recession Strategies
- Rules for Investing During Volatile Times
- Gold vs. Stocks: Worst Yet to Come
- Inflation? Deflation? Buy Gold
- Gold: Reality vs. Liquidity
- Inflationary Fire Insurance
- Euro Collapse, Gold Surge
- Can China Rescue the World
- 5-Figure Gold & Central Bank Sales
- Gold vs. Mervyn King's "Queasing"
- Japan Inflates, Gold Jumps
- India's Latest Gold ETF
- Saving & Spending
- The Long-Run Value of Gold
- What are the best ways to buy gold
- Gold Bullion
- Gold Bullion Investment: Why buy gold today
- Krugerrand Gold Coins
- Mexico 50 Peso Gold Coin
- Tips for Gold Investment
- Investing in Bullion and Collectible Gold Coins
- Guidelines to Buy Your First Ounce of Gold
- Buy Mexican 50 Peso Gold Coin as Safe Investment
- Mexican Gold Coins for Gold Investors
- Types of Mexico Gold Coin
- What You Need to Know Before Buying the Gold 50 Pe...
- A Brief History of Mexican Coins
- How to Buy Cheap Gold 50 Pesos Mexico Coin
- Why Buy Mexican 50 Peso Gold Coin Now?
- Tips of Collecting Mexican Old Coins
- Mexican Coin Collecting Guide
- Tips of Collecting Silver Buffalo Coin
- American Buffalo Coin Buying Guide
- What’s Buffalo Nickel Value Today?
- Why You Should Buy Proof Gold Buffalo Now
- History of American Gold Buffalo Coin
- Types of American Buffalo Gold Coin
- Why You Should Buy American Gold Buffalo Coins
- Buy $50 Gold Buffalo as A Safe Investment
- What You Need to Know Before Buying Buffalo 2006 G...
- 2001 Silver Buffalo Buying Guide
- How to Buy Gold American Buffalo Coin Online Safely
- United States Mint Updates Pricing for American Bu...
- Retiring For Fun And Profit
- With Retirement Comes a Financial "Risk Zone"
- Pensions- what can you expect at retirement
- 4 Easy Ways to Reduce College Costs and Supercharg...
- Different Types of Investments
- Invest In Your Retirement With A Internet Home Bus...
- What Makes the FOREX Market Different From the Sto...
- FOREX - Foreign Exchange Market
- Forex Trading - Should You Invest
- Stock Day Trading Tips 2009 > How to Pick Good Sto...
- A look at Elliott Wave Theory
- Learn the Best Solution for Retiring Wealthy
- Put options Vs Short ETFs
- How to Use Covered Call Options For Additional Saf...
- Cutting losses on Stock Options
- How To Invest In This Economy
- 3 Easy Ways to Go Short with Call Options
- The Media's Effect on the Stock Market
- Buying Options With a Plan
- Stock Market Trading: What You Need To Know
- Timing the Market for Profitable Stock Investment
- Bullet Advisory Indian Stocks- DOW NASDAQ U.S.Mark...
- Monthly Compounding Better Than Annual? Not Always
- Successfully Trading Silver Futures
- Your Financial Future Is In Your Hands
- Preparing For One's Retirement
- Enjoy and Make Money at the Same Time
- Cash Earning Strategies
- Profit From Dividends
- Picking the Right Wealth Consultant
- Be Wary of "Blue Chip" Penny Stocks
- Creating a Life After Retirement
- Retirement and Business Opportunities
- Home Business for Retirees
- Make Money Even If You Have Retired
- Clearing Debts before Retirement
- Working From Home: A Simple Way to Stay a Producti...
- Earning Opportunities For Retirees
- LOOKING FOR THE BEST PENSION PLAN
- Buying a Business
- What Businesses Can You Buy
- Government announcement on pension minimums
- Secrets Real Estate Provides Hope in the Economic ...
- Can I afford to retire
-
▼
March
(180)
0 commets:
Post a Comment