BE A WINNER OR LOSER IT IS YOUR CHOICE.
by, 20th-August-2008 at 05:28 PM (1494 Views)
The Winner has a preset profit in mind at the beginning of the trade and usually will sell when this level is reached.
If the share price is going up faster than he anticipated or planned for, he will quite often sell part of his stock holding and then a rising stop loss to lock in further profits as they eventuate. This he reviews on a regular daily basis.
The Loser has no idea as to what his profit is likely to be, and will hang on for the highest profit possible, only quite often to see that the very next morning, that the profit takers have moved in and that any prior profit that might have been made is now a lot less than if they had got out earlier.
Sometimes they miss out completely and experience a loss instead. This unfortunately is happening all to often.
The Winner very rarely will put in an order overnight. He will patiently wait until the initial scramble for shares has occurred and the "dust has settled” which is usually around half an hour after the market has opened.
Quite often the price is lower than the night before and he now has some idea of the mood of the market. He fully realizes that no one can predict which way the market will move during the day. But he is prepared for all eventualities.
The Loser of course could not wait and paid the opening price which sometimes can be higher than they bargained for, then only to see the share price recede during the oncoming days trading or they missed out altogether and will now chase the price. (Also See Choice 4.)
The Winner has around a total of Five to Ten stocks invested in an average portfolio, and never exceeds his budget. He realizes the value of diversification and not having all your eggs in one basket.
He knows that all of the sectors in the stock market are affected differently from time to time and that they are cyclic in behavior.
Just take property and the banking sectors for example and see how they have behaved of late.
The Loser invariably homes in on the current "Flavour of the Month” as this is the one stock that he is going to make a bundle on. And then win or lose, and when that stock's shine wears off and is now not so popular, then it's on to the next one. Forever looking for that get rich quick stock. The next potential gold mine..
Don't get me wrong there are successful traders out there who have made money chasing stocks, but they are in the minority and very rarely are they consistently profitable.
The Winner realises what role "The Emotions" particularly "Fear and Greed" play in the daily trading stock market scene, and utilises them to his trading advantage.
He knows that when panic reigns and there is a downturn in share prices that this is the opportune time to go bargain hunting.
He keeps an eye open for good quality stocks that have had a plunge in their share price knowing full well that they will recover in the not too distant future.
He always has extra funds available for events such as this.
The Loser’s trading behaviour is governed by his emotions and the actions and emotions of others in the stock market.
He buys when they buy and sells when they sell. When there is a dip in the market for whatever reason the market panics and sells, he will copy them. Reason and logic play no part in his trading behaviour.
The Winner believes in the value of paper trading. For this is where he can fine tune his trading skills and tries out new methods and ideas before putting his hard earned cash at risk.
He also regularly reads and is willing to learn new techniques, for he is only too aware that he does not know it all.
The Loser can not see point of this exercise and sees it as waste of good time and effort.
The Winner knows when HE has made a mistake and teaches himself so as not to make the same mistake again and adjusts his trading skills accordingly. For he knows that he alone is to blame and that the fault is his and his alone.
The Loser blames the market, the stock, the information he received from his advisor or the finance magazine from where he got the hot tip.
The last person he looks at is himself. So if no changes are made in his trading habits, then it is only a matter of time till that mistake or error in judgment occurs again and again to the detriment of his trading capital.
In a nutshell The Winner has planned to Win whilst the Loser by not planning is really planning to fail whether they are aware of it or not.
Is success guaranteed? The honest answer must be NO that it is not. Neither can you predict how a stock will behave in the stock market from one day to another.
Though there are people around who believe they can and will charge you handsomely for the privilege of letting you know also.
The purpose of The Choices above is help you to Minimise Risk and therefore to assist you to swing The Probabilities of Success in your favour.
For it is by using The Laws of Probabilities and Averages that you will maximise your chances of becoming more profitable in your future share trading.
So it is now up to you to make Your Choice as to where you go from here. It is in your hands and yours alone. No one else can do it for you.
I wish you every success in your future profitable trading :-)
Strudy is a keen successful share trader on the Australian Stock Market Visit his weblogs
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