Stock traders love to play the blame game. They blame a company, a CEO, a stock, a market, the economic cycle, whatever. What they don't do is blame themselves.
Just when you think they might have learned from their mistake, they'll screw it up again with some new, baffling mistake.
But the mistakes really aren't new. Everyone has made them.
Here are the 6 most common mistakes stock traders make because they fall back on the same gimmicks to try to squeeze a little more cash out of a stock.
1. Research shows that it often takes a long time for a loser to turn around. Most amateur traders hold on to losers much too long. They go from having a profit thesis to getting down on their knees and praying for their stock to reverse. Save the church drama for Sunday and if you want to pray, go be a preacher. You'll make more money that way. Get rid of your losers quick and let your winners ride.
2. When a bullish profit thesis fails, sell the stock. Do not wait for fundamental confirmation. Believe what you see. Amateur traders hold on to a dog because they don't know why their stock sold off. As a result, they erroneously believe their stock will come back and that the next earnings release will prove this. Do not use fundamental analysis as a way to confirm technical analysis. Chart patterns and price action happen long before the fundamentals do. Chart patterns and price action lead the economic cycle by anywhere from 3 to 9 months.
3. Avoid buy low, sell high, a.k.a. valuation investing. Do not go "bargain hunting". Stocks going down are the wrong stocks to own. Value investing is the skilled art of buying low and selling even lower.
4. Watch out for stocks that are in a trading range and then suddenly break down. The trading range becomes a major top that forms solid resistance against future price rises.
5. Do not bottom feed. Buy strong uptrending stocks, not weak stocks you think have formed a bottom. Bottom feeding is for skilled master traders only, and even those guys use tight stops. Bottoms are usually not sideways action but instead are 'v' bottoms: quick intra-day lows that rebound much too fast and make the spread between the bid and ask so whacked that most amateur traders never get their orders filled. Nothing can be more funny than watching a know it all claim that a bottom is in place when he eyes a stock going sideways over several weeks or months, and then watching him lose his shirt as the stock breaksdown. Just make sure you're not the laughingstock.
6. Don't buy a stock anywhere near an earnings announcement. Earnings announcements often mark a sudden reversal in investor psychology, especially in a weak part of the economic cycle (bear market, high unemployment).
Stock traders love to play the blame game. They blame a company, a CEO, a stock, a market, the economic cycle, whatever. What they don't do is blame themselves.
Just when you think they might have learned from their mistake, they'll screw it up again with some new, baffling mistake.
But the mistakes really aren't new. Everyone has made them.
Here are the 6 most common mistakes stock traders make because they fall back on the same gimmicks to try to squeeze a little more cash out of a stock.
1. Research shows that it often takes a long time for a loser to turn around. Most amateur traders hold on to losers much too long. They go from having a profit thesis to getting down on their knees and praying for their stock to reverse. Save the church drama for Sunday and if you want to pray, go be a preacher. You'll make more money that way. Get rid of your losers quick and let your winners ride.
2. When a bullish profit thesis fails, sell the stock. Do not wait for fundamental confirmation. Believe what you see. Amateur traders hold on to a dog because they don't know why their stock sold off. As a result, they erroneously believe their stock will come back and that the next earnings release will prove this. Do not use fundamental analysis as a way to confirm technical analysis. Chart patterns and price action happen long before the fundamentals do. Chart patterns and price action lead the economic cycle by anywhere from 3 to 9 months.
3. Avoid buy low, sell high, a.k.a. valuation investing. Do not go "bargain hunting". Stocks going down are the wrong stocks to own. Value investing is the skilled art of buying low and selling even lower.
4. Watch out for stocks that are in a trading range and then suddenly break down. The trading range becomes a major top that forms solid resistance against future price rises.
5. Do not bottom feed. Buy strong uptrending stocks, not weak stocks you think have formed a bottom. Bottom feeding is for skilled master traders only, and even those guys use tight stops. Bottoms are usually not sideways action but instead are 'v' bottoms: quick intra-day lows that rebound much too fast and make the spread between the bid and ask so whacked that most amateur traders never get their orders filled. Nothing can be more funny than watching a know it all claim that a bottom is in place when he eyes a stock going sideways over several weeks or months, and then watching him lose his shirt as the stock breaksdown. Just make sure you're not the laughingstock.
6. Don't buy a stock anywhere near an earnings announcement. Earnings announcements often mark a sudden reversal in investor psychology, especially in a weak part of the economic cycle (bear market, high unemployment).
Stock traders love to play the blame game. They blame a company, a CEO, a stock, a market, the economic cycle, whatever. What they don't do is blame themselves.
Just when you think they might have learned from their mistake, they'll screw it up again with some new, baffling mistake.
But the mistakes really aren't new. Everyone has made them.
Here are the 6 most common mistakes stock traders make because they fall back on the same gimmicks to try to squeeze a little more cash out of a stock.
1. Research shows that it often takes a long time for a loser to turn around. Most amateur traders hold on to losers much too long. They go from having a profit thesis to getting down on their knees and praying for their stock to reverse. Save the church drama for Sunday and if you want to pray, go be a preacher. You'll make more money that way. Get rid of your losers quick and let your winners ride.
2. When a bullish profit thesis fails, sell the stock. Do not wait for fundamental confirmation. Believe what you see. Amateur traders hold on to a dog because they don't know why their stock sold off. As a result, they erroneously believe their stock will come back and that the next earnings release will prove this. Do not use fundamental analysis as a way to confirm technical analysis. Chart patterns and price action happen long before the fundamentals do. Chart patterns and price action lead the economic cycle by anywhere from 3 to 9 months.
3. Avoid buy low, sell high, a.k.a. valuation investing. Do not go "bargain hunting". Stocks going down are the wrong stocks to own. Value investing is the skilled art of buying low and selling even lower.
4. Watch out for stocks that are in a trading range and then suddenly break down. The trading range becomes a major top that forms solid resistance against future price rises.
5. Do not bottom feed. Buy strong uptrending stocks, not weak stocks you think have formed a bottom. Bottom feeding is for skilled master traders only, and even those guys use tight stops. Bottoms are usually not sideways action but instead are 'v' bottoms: quick intra-day lows that rebound much too fast and make the spread between the bid and ask so whacked that most amateur traders never get their orders filled. Nothing can be more funny than watching a know it all claim that a bottom is in place when he eyes a stock going sideways over several weeks or months, and then watching him lose his shirt as the stock breaksdown. Just make sure you're not the laughingstock.
6. Don't buy a stock anywhere near an earnings announcement. Earnings announcements often mark a sudden reversal in investor psychology, especially in a weak part of the economic cycle (bear market, high unemployment).
Stocks Above I Currently Hold In My Own Trading Account: Long LIFE
Guerilla Trader Quote
“The industry hides good statistics from the public, while promoting its Big Lie that money lost by losers goes to winners. In fact, winners collect only a fraction of the money lost by losers. The bulk of losses goes to the trading industry as the cost of doing business—commissions, slippage, and expenses—by both winners and losers.” by Dr. Alexander Elder Come Into My Trading Room
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