I just started reading Trading in the Zone by Douglas. Hopefully I will gain at least some insight into some of my issues...
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What's Wrong with Me?
- Thread starter caplan8293
- Start date
Quote from caplan8293:
Let's say I buy a stock at $11, which my analysis shows should go to $13 in about two weeks. Instead, it drops down to $9 about two days later.
I am disappointed and want to get out, but do not want to take a $2 loss, so I hold on to it, hoping for a rebound. A week later, it goes back up to $11, which would allow me to exit flat. Do I sell it? NO. Instead, I feel that if I hold on to it a little longer, it will still go up to $13.
So what happens? I hold on to it and it drops back down to $9. The cycle starts over.
What is wrong with me?
Apart from the good advice re cutting losses, you problem stems from the classic error. You do what most humans insticntively do - fear that profits will taken away from you and hope that losses will magically dissapear. One of the hardest things to do in trading is to learn to hate to take a profit and love to take a loss because it is so contrary to most peoples upbrining. In the end, you start to notice that the difficulty is not with the markets, it's with ourselves.
I'll tell you more if you're interested, if not, no worries, have a good one.
Lovely sunny day here at the seaside