The Third & Fourth Technical Stock Trading Sins: Pride & Envy
By Ultimate Trading
More Technical Stock Trading Sins That Can Ruin Your Trading Future
Pride costs thousands of people millions of dollars from
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.
Heres 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 companys 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
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 doesnt 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 dont 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 arent a good idea in the first place. These traders can get
so confused trying to keep track of everyone elses 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 isnt to play a competitive game - its 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
trading, and how to achieve it without worrying about what
everyone else is doing.
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Technical Stock Trading