The Third & Fourth Technical Stock Trading Sins: Pride & Envy

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More Technical Stock Trading Sins That Can Ruin Your Trading Future

Pride costs thousands of people millions of dollars from technical stock trading. Because these traders don't want to admit that they made a decision to get into a position that was unwise, and they don't want to admit that they were wrong about the bond, commodity, currency or technical stock trading, these traders to refuse to take small losses on bad trades.

Here’s an example: A trader involved in technical stock trading buys 500 shares of a stock at $20 per share, investing $10,000. He believes that the concept behind the company’s innovative new software is going to be the extremely successful, and he's seen a lot of reliable information that backs up this idea. The price has recently moved up steadily, from $16 to $20, so it seems the market shares his belief. For some reason, though, the new concept is slow to catch on.

The trader involved in technical stock trading holds the stock for three weeks and sees its share price remain essentially the same as where he bought it. It goes up a dollar, down a dollar, and so on - it's trading in a range and doesn't show any signs of movement. Then the market trends downward and all the tech stocks go down. His stock doesn't fall quickly, but over the next couple of weeks it gradually sinks back to $16 a share. There's no sustained volume, and it seems that no one is interested in this technical stock trading.

The trader insists that if he just keeps technical stock trading with this stock it will not only recover, but will bring him a large profit once the rest of the market realizes its value. He keeps technical stock trading for the next five months, watching his stock move up and down between $15 and $16. Finally, after more than six months, the stock goes on a run - up to $22. The trader does the right thing and takes profits at this level. Now he can have the last word with all his friends, who were sure he would never make money from technical stock trading. He gets to say to everyone, "I told you this stock would be hot."

But it doesn’t matter. The reality is that while technical stock trading, he tied up $10,000 for six months for a 10% profit, when he could have made at least that much every week or so by moving on to better trades. There was no compelling reason to think the stock would go up soon, and the trader had no exit plan.

It can be difficult to admit you were wrong on a trade, but successful traders do this all the time. They refuse to become emotionally involved with their technical stock trading, viewing each as simply a transaction that should make them money. If their technical stock trading goes against them, which happens to all traders, they simply exit the position while their losses are small. Successful traders know they don’t have to win on every trade. The technical stock trading market will always provide them with another opportunity to make a profit.

While some traders always have to be right, other traders spend a lot of energy focusing on what everyone else is doing with their technical stock trading. They become concerned that other traders are making 30% a week on their portfolio, which everybody else finds great technical stock trading opportunities that they miss and that everybody else knows what they're doing in their technical stock trading endeavours while they don't. This leads these traders to try to copy what others are doing. Which in turn causes the envious traders to make the same trades too late, and to make trades that often aren’t a good idea in the first place. These traders can get so confused trying to keep track of everyone else’s technical stock trading that they don't understand what's going on with any of them.

What these traders often don't realize is that a lot of what they hear about technical stock trading is an exaggeration. They are being envious of successes that may not even exist, and they end up compromising their technical stock trading system because of it.

Another side of envy is over competitiveness. Some traders want to show everyone that they're the best, the smartest, the most successful at technical stock trading. Often this is based on a sense that they are really none of the above. But the goal of technical stock trading isn’t to play a competitive game - it’s to make money. If you're in it for the competition, you should consider playing another game. The only reason to get involved in technical stock trading is to make money and if your mind is on an imaginary competition that only you care about, you'll never succeed.

Those successful at technical stock trading ignore hype, rumours, and boasting, and use their own knowledge and judgment to find trades that make sense and that they have confidence in. They don't ignore the current public sentiment, because that sentiment can sometimes lead to good technical stock trading opportunities. Successful traders know what is reasonable to expect from technical stock trading, and how to achieve it without worrying about what everyone else is doing.

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