The speculator's chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation when the market goes against you hope that every day will be the last day--and you lose more than you should had you not listened to hope--to the same pioneers, big and little. And when the market goes your way you become fearful that the next day will take away your profit, and you get out--too soon. Fear keeps you from making as much money as you ought to. The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. he must fear that his losses may develop into a much bigger loss, and hope that his profit may become a bigger profit. It is absolutely wrong to gamble in stocks the way the average man does.
"In both bull and bear markets, someone will always say that stocks are overvalued. And, of course, that person will be right one day. But as a trader, it is wise to take positions in the direction of the momentum rather than form an opinion. The best traders I know blew their accounts shorting an overvalued stock that kept going higher." Side note: Since the day I started trading, the bears always had a "legitimate" argument. Stocks were always overvalued and a call for a big bear market was made. I remember when the Dow hit 4000 and the bears called for 2000. And kept saying we will crash. Hmmm they were right at one point, but the low we made was still twice the 4000 high. One of the hardest adjustments to make is to be bullish after a bear market. Especially because the bear argument is fresh in our minds and the overall market psychology isn't that great. After all, how can XYZ stock could possibly be worth three times as much as it was trading last month? Nothing really changed or did I miss something ... hmmm.... that's when they leave you behind. And the pullback that we all want doesn't come. And not until we ALL say,if you can't beat them join them,and we finally buy stocks that the market will top. This is how the game is played... Oh and when I say the best traders blew their accounts while shorting overvalued stocks I mean it. KTEL, AMZN, YHOO, CMRC, KKD, and INSP took not only professional traders out of the game but also market makers. I can count 11 traders that I personally know who lost ALL their money being short one of the above stocks. Great thread Tony
Patience is the weapon that forces deception to reveal itself... Never spend more time on a critic than you would give a friend... You will never reach the palace talking like a peasant.... You will never outgrow warfare, you must simply learn to fight... What you fail to master in your life will eventually master you... "Wisdom Keys" ...Mike Murdock
"Big institutions can't hide - you can always hear an elephant coming - and what they do results in some fairly easy to spot patterns" Kevin Haggerty The Best
Solomon Cohen campared [accurate paraphrase ] an active trader to a cheetah or a mountain lion.................Translation [1] A mountain lion NEVER jumps on a cape buffalo-size too big, size too deadly.............................[2] A mountain lion does like a big beef steak or venison steak,moves s-l-o-w like a turtle when watching a deer or a stock watch list...............................[3]A mature mountain lion knows that a deer ,more often than not moves along an approximate path.For example your favorite NASDAQ stock may move 11%,or 22% in one day or one week ,but maybe not much more ................Acurate paraphrase care of Bulls, Bears,Millionaires book...........................Double checked 11-22 percent -Stock Traders Almanac-Hirsch
"Defense is for times of insufficient strength and offense is for times of great strength" SunTzu The Art of War
"There are thousands of ways to make money out there. Thousands. No one way is right. I happen to think my way is better for me, or I would do it another way. I know it is right for me because it has made me a ton of money." Jim Cramer
"When you are scared or worried, then do not screw around with getting out. Just get out. Don't try to game a pullback, or wait for a better opportunity." Gary B. Smith