Stops & Trailing Stops Are Important
Learning How To Lose Is More Important
There are certain “rules” we follow and other “basic” actions we teach so you can be the “best damn trader or investor” possible. It takes time. We’ve been doing this for more than half of a century. It’s a marathon, not a sprint but there are a couple rules and actions you need to incorporate into your journey as it begins.
Stops & Trailing Stops Are Important
Setting stops and trailing stops is a necessity for most, especially trailing stops. Rules we abide with are:
Always use stop losses. Let me repeat; always use stop losses. Let me emphasize; ALWAYS USE STOP LOSSES. This world changes on a dime.
Let your profits run but remember that greed kills; bulls make money, bears make money and pigs get slaughtered. People far too often just look for the “big one”; not me. I’ll take a piece out of each transactions knowing I’ll always identify the next one. Remember, you’ll never go broke taking a profit.
I seldom enter into a position unless 90% of my “conditions” are met. Under premises of this nature I seldom set initial stop losses as I’m seldom wrong at entry points as I am very cautious. That’s not to say I’m never wrong. Quite often I am early but I have the “firepower” to add to my position if it initially goes against me. Most reading this post do not have the same ability. For you, I suggest setting stop losses, perhaps about 1% to 2% below your initial entry point. Remember, there will always be another trade.
On the trailing stop side, one thing I hate to have happen is “giving up a profit”. This is not going to happen in my world and should never happen in yours. Your right, the trade moved in the positive direction but remember, you might have some “hiccups” or what drove you to make this trade might change. I often depend upon technicals to set my trailing stops. While I seldom trade and most of my actions prove positive I am never one to give up a winner. It’s good advice, follow it.
Learning How To Lose Is More Important
Naturally we have several “rules” we try to drill into your head when it comes to loses but unfortunately too many of you think you’re going to be right every time. That’s not the case. Learn from your losses and learn from your mistakes. Do not define the word “idiot” in its primary form by doing the exact thing “over-and-over” again expecting a different result. People learn more from losers than winners.
It’s true but there is more. Consider these rules and remember, you do not have to be right every time.
Do not stay too long in a good trade. This is for all you day traders. You are short term by design. Your plan dictates a desire like the hamburger chain, “In & Out”. Follow your plan; if it’s not working reevaluate your plan and reassess what type of investor or trader you are especially if you’re not profitable.
Cut your losses short. There will be more opportunities. How many times have I said this? I’m not doing it for my health; abide by this rule. You’ll hear it from me over and over again so listen, it works.
Do not overtrade. I don’t trade much. In a prior lifetime I traded a lot more. As I have aged the “reflexes” are not there, neither is the interest. Trade within your own boundaries; wait for opportunities to arise, those that you plan for, the ones that “find” you versus just shooting “buckshot”.
If you cannot handle losses go do something else. Every investment or trade initiated is not going to be a winner. Losses occur when there’s a lack of harmony between your personality and the “rules” you follow. People take winners off the table too soon; let them run. It’s always better to manage a few “good” trades versus a bunch of inferior little ones.
If you begin to lose money “get out”. If your “initial” decision is incorrect, chances are nothing positive will happen to change that direction. Never add money to maintain a “losing position”. Take small losses; never let a small loss turn into a big loss. Get into cash, you’ll think much more clearly. You’re going to lose, not every action you take is going to be a winner. Learning “how to lose” is an ‘important’ part of being the “best damn trader or investor” you can possibly be. Too many people think they need to be right every single time. You’re human; leave that for the superheroes.
To cope with losing acknowledge your feelings, learn from experience, maintain your perspective, remain positive, move on and above all seek support. Before you trade or invest understand how the world keeps spinning on its axis; it’s a good fit with what’s happening “between your ears”.
Now that wasn’t too bad, was it? Remember you are on a “learning curve” to success. I believe in luck and the harder I work the luckier I get. This is going to happen for you too, just keep on working and take The Ticker courses. What we’re teaching you here is a excerpt of what we teach in our classes. They are time-tested and very valuable for most who are actually interested in learning. We’re here to teach you, take advantage of everything offered. We guarantee you’ll become a better investor or trader.
The Beatles released “I’m A Loser” sixty years ago. The last thing anyone thinks of when The Beatles are on their mind is that they were “losers”. In reality, until the group hit the United States they were not the winners we know them as today. All of us need to learn. Learning comes more so from making mistakes and learning from them. Babe Ruth struck out 1,330 times in his career. He only hit 714 home runs in his career but he had 2,873 hits. Every time he struck out he was closer to getting a hit or even a home run. The Babe learned the hard way, he often made mistakes just like The Beatles did but eventually, they both became much better at everything they did.