Sunday, February 27, 2011
Sell the Loser or Sell the Winner first?
Listen to the market, it can talk to you. When you buy a stock and is making money, the market is telling you are right, so let the profit run. When the trade is losing money and getting worse, the market is telling you to get out. A bad trade is like a dead fish, the longer keep it, the worse it smell.
Investor need to think like a winner, the winner don't add to or "average" losing position. They sell the losing trade and find the new opportunity. They may add to the winning trades, always remembering that any time market can turn and prove them wrong.