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KEY
TO SUCCESS
In life, you have to learn to walk before you can run. In
the stock market, you have to learn to lose before you can truly win.
Sure, your first trade may be a winner, but to consistently
make money in the stock market you have to learn how to lose. More to the
point, you have to learn how to cut your losses.
The majority of people who dabble in the stock market see
themselves as smart, educated and sharp. Self-belief is great. The most
successful people in the world have a strong belief in themselves. Some of the
most unsuccessful people in the world also have a strong belief in themselves.
So what's the difference between the successful and the unsuccessful?
One major difference between successful traders and
unsuccessful traders is the ability to admit when one is wrong. A successful
trader will cut their losses before they get out of
hand. An unsuccessful trader will let their losses grow in the false belief
(hope) that things will pick up.
It would be nice if every stock pick was a winner, but when
you get the odd loser you better make sure you cut that baby lose before you
lose some big.
The Stop-Loss:
Before you even consider entering a trade, you should
determine your stop-loss point. Your stop-loss point should be set at a price
that you're willing to sell your stock at should things turn bad. The price you
pick will vary depending on your financial position and the particular stock
being considered.
Modern trading systems have completely automated stop-loss
systems. This makes it so easy to set stop-losses that you have no excuses for
losing big in a single trade anymore! In fact, you're mad if you don't take advantage
of stop-losses. The only trick is setting them wisely. You'll learn how to plan
and time your entry and exit points on this site over the next few months.
Until then,
good luck and keep on learning..
By Scott Geer
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Happy Investing & Trading… |