Have you had one of those huge investment winners ? a stock that went from $2.00 to $80.00? Or any other numbers you want that gave you a gigantic percent profit?
Did you take the profit or did you watch the equity drop back down to what you paid for it? I hope you sold and kept the money. That's what it is all about. So many times when I was a broker I have seen customers make large profits and then think they were omniscient about trading and within a short period give back what they had made.
As a brokerage company owner I had seasoned brokers do the sane thing. One of my men made $150,000 in a short time. I called to congratulate his performance and suggested he take a vacation from trading for a while. He said, "No, Al, I know what I am doing". The very next month he lost $155,000. What happened?
Listen carefully as I am going to tell you one of the great truisms not found in the trading training manuals. If you are doing any trading whether in stocks, mutual funds, real estate, currencies, whatever, this applies. Print this out, frame it and put it up on your office wall.
"Making a lot of money is just as upsetting to your mind as losing a lot of money".
A big score destabilizes thinking. Many people want to do it again and again so they immediately plunge back into their investments with their winning cash and make bigger bets. It is almost without exception that they become losers and give back their winnings.
For many years I have advocated taking time off after a big profit. It takes time to get your head on straight again. As a former floor trader I would have about 6 or 8 times during the year when I made a good "hit". Then I would immediately call my travel agent to ask where I could go for a week. I knew I must get away because my investment strategy would be clouded by success.
Too many of the big winners seem to alter their basic trading plan because they now had a large amount with which to trade causing them to deviate from their successful pattern. They then became losers. Because of their success their thinking changed and they were not aware of what had happened. The trader must get away and let his emotions down.
A disturbing event, even a positive one, can alter up your thinking. If you want to keep your investment profits you must keep your emotions under control.
Al Thomas' best selling book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know. Copyright 2005
Everyone's talking about China. Don't miss the opportunities in the... Read More
Have you had one of those huge investment winners ?... Read More
Financial Spread Betting (or Trading) offers a tax free method... Read More
Stock market trading is a fascinating activity.There are so many... Read More
How do you make your investment decisions and where do... Read More
Young readers know that March 4th is the birthday of... Read More
Many people hear "retirement" and think- what? 401K? Roth vs.... Read More
Agonizing displays of poor theatrics failed to entertain my mind... Read More
Death and taxes! The certainties of life! And then, of... Read More
This column has often focused on intangible investments like stocks... Read More
Not long ago I was laying on my son's floor... Read More
The Value of Gold in a Era of Paper Assets,... Read More
If you want to make the most of your personal... Read More
Once upon a time, offshore investment strategies were spoken of... Read More
A fickle stock market encourages good-humored mockery.Recently, as I watched... Read More
A Savings Incentive Match Plan for Employees plan, better known... Read More
College Savings Plans ? are they the best choice for... Read More
Q: I own a small decorating business and I'll be... Read More
For most people, there is a direct correlation between how... Read More
By definition, value investing is the process of selecting stocks... Read More
Today, I am going to start a multi-part series about... Read More
About 6 years ago I started to notice that certain... Read More
Most People just don't understand the power of using their... Read More
What are the risks?Today, investors are increasingly turning to global... Read More
It is a common question when investors review their retirement... Read More
Have you considered buying a franchise instead of trying to... Read More
You know all the articles you read about annuities that... Read More
When trying to analyze whether a promotional ad for an... Read More
Yes, it's the time we've all been waiting for?tax season!... Read More
To create momentum in your options trading you need to... Read More
The Foreign Exchange Market, better known as FOREX, is a... Read More
FOREX, the term for the FOReign EXchange market, is an... Read More
Investors are still too slowly realizing what the academics have... Read More
Q. What is a basket?A basket is a group of... Read More
How many of you out there think that the market... Read More
Have you often wished you could have got in on... Read More
When developing a plan for your finances, the toughest question... Read More
This column has previously discussed "picturing the future that we... Read More
What are the risks?Today, investors are increasingly turning to global... Read More
As I take my leisurely walk with my dog through... Read More
The following lists of questions are suggested questions to ask... Read More
Not long ago I was laying on my son's floor... Read More
When you start your program to purchase your "ideal" company,... Read More
The most basic aspect of trading is learning to differentiate... Read More
First and foremost, an opportunistic strategy for creating wealth in... Read More
They're real, but few survive. High risk investing is dangerous... Read More
Do you have the right temperament?Starting a small business is... Read More
An Ira is one of the greatest ways to save... Read More
Can you concisely summarize your investment philosophy in a few... Read More
Computerized investing. Online investing. Have you taken the next step... Read More
Over 80% of all individual investors lose money in any... Read More
About thirty years ago, statisticians armed with all of their... Read More
Trend following also called momentum trading is the simplest and... Read More
Based on consistent results I think Buy & Hold should... Read More
The stock market fell sharply Thu and Fri before and... Read More
If you are looking for a safe investment and you... Read More
I recently received an e-mail from a young lady who... Read More
You are 55 years old (or somewhere around there) and... Read More
Let me start by answering that question...if an annuity fits... Read More
We've helped a number of clients develop business plans and... Read More
Investors usually don't have an aversion to buying an asset.... Read More
A way that investors get ripped off and in a... Read More
High Yield Investment Programs (HYIPs) appear at first to be... Read More
If you want to retire rich, start saving investing early.... Read More
This article was originally featured in Daryl Guppy's 'Tutorials in... Read More
Agonizing displays of poor theatrics failed to entertain my mind... Read More
Investing |