My friend Pam, a marketing secretary who did not go to college asked: I trade a lot every single day but I always think that my stocks or options are going to go up. Am I trading incorrectly? How should I correct this?
Pam is a good friend of mine so she will obviously allow me to poke some fun at her in this report. I would like to notify all of the readers that Pam has corrected her strategies and quit her job as a secretary and works full time as a trader for herself.
Pam’s behavior defines the behavior between excellent traders and inefficient ones. It’s called discipline. One of my friends named Mike who is a very good trader once summarized trading as hitting many singles and not trying to go for homeruns each time. What this means in plain English is if someone is able to make money off a trade and makes a 5% increase on a stock trade, they must stick to the guideline they set for themselves and stick to them for life.
I can’t tell you how many life savings are cost by investors who constantly keep telling themselves that stocks will return to a specific position before dumping them. The trick to being a very good trader is to be very disciplined in terms of the moves you make and constantly be planning the next move. There is a lot of risk involved in not selling when you make your profit, and one should not feel badly if he could have made more. It generally does not work that way.