View Full Version : Fixing Leaks

07-20-2005, 03:07 PM
so there is this pipe in my house... Actually since I haven't posted anything in awhile I figured I'd do my best to add some value to the forums here, so here goes. I've noticed a few common 'leaks' that amateurs commit when trading. I know that many of the people here are very experienced traders, but for those that are not I'd like to mention 3 leaks commonly seen in beginners.

1. Have a plan - So many folks buy a stock because it's 'good' but never go past there initial read. Do you know what your risk/reward ratio is? Do you know when you'd sell the stock if the price moved against you? When would you take a profit? Are business conditions still favorable for the company? What if it doesnt move at all for 3 months? Just like in poker, It's important to know how you will respond to differnt stimuli ahead of time.
2. Be patient on entries - When I first started trading, I chased stocks alot on entering. Even if you feel that you are missing 'your big chance' your likely not. Wait for a favorable price on entry, you can always get out at market levels.
3. Learn to recognize panic situations. Many good oppurtonities can be uncovered when people stop thinking rationally. Dont you be one of those people.

Anywho, hopefully this post was useful for someone.