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Learn To Like Your Losses
By Larry Potter
Sounds almost morbid doesn't it?
Well, maybe it is....but losses are a fact of life and your
ability to take them systematically without fault
is key to your long term success.
You see, every system ever designed and traded has suffered
losing trades and most have had several losing trades in a
row. Even short term systems that purport a high percentage
of winners will hit periods of 3-4-5 losses in a row.
If you stop taking the signals, then your gauranteed to lose
and never get back your money. Ironically, after a losing
streak, is when a system will normally bank a series of winners
or the one big profit trade.
So the next time you find yourself mired in a drawdown, take
some satisfaction in knowing that losing periods happen
to everyone and that if you stay disciplined, your method will
most likely carry you through it. Realize that the pressure
you feel to quit, is the pressure that every trader feels
at some point and it's how you handle that pressure that defines
your ultimate success. Winners trade through it and losers don't,
it's just that simple in most cases.
Now please, the above discussion is based on the assumption
you have a sound trading method and you implement
proper risk management. If you don't have those two variables
nailed down, all the persistence in the world will not
help you.
For More Free Trading Tips, go to:
http://stock-trading-tips-short-term.blogspot.com
Larry Potter is a recognized authority on the subject of trading
and has been publishing his newsletter, Stocks2Watch®, since January
of 1998. Each evening, his newsletter contains picks for the next day
and always includes a daily trading tip.
For a FREE report on HOW TO TRADE FAST and a free trial to Stocks2Watch®, click here
http://clik.to/stocks2watch
Tip 2: Pullbacks
When a stock sells back after a run on lower volume, we refer to that as a
pullback. Pullbacks are a natural and healthy part of a move up. Stocks
cannot continue to move up without stepping back and taking a rest. It is
important that it occur on lower volume - that shows orderly profit taking
and not distribution. Averages act the same was as individual stocks, and
that is why all the analysts get bent out of shape when the NASDAQ has a 45
degree climb with very few pullback days.
Pullbacks are also called 'retracement.' Stocks tend to retrace or
pullback the same percentage after each run. Some stocks retrace 25%-30%,
some 50%. We prefer to use the moving averages as a gauge - the 10 day
moving average is often reliable when stocks are moving up in a good market.
About the Author
Larry Potter is a recognized authority on the subject of trading
and has been publishing his newsletter, Stocks2Watch®, since January
of 1998. For a FREE report on HOW TO TRADE FAST and a free trial to Stocks2Watch®, click here
http://clik.to/stocks2watch
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