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Why some investors consistently lose

I have been a losing trader going on a decade.   I still am in the game and trying to beat it.  I think I may have had a realization today that will enable me to be a better trader.   I have worked hard, and traded successfully for short periods of time.   Many of my ideas work; but,  I get snagged sooner or later on some stock idea that doesn’t work.  Being stubborn and overly aggressive on a trade.   Simple as that.  No trading method is going to be easy to follow; but, analysis of the past makes it easy to see how my experience of losing won’t stop with out change.  Except smaller returns in exchange for long term success.   Here is my analogy.  If you bet everything you have on a likely event; even if the even happens almost every time I will eventually go broke; despite how often I am successful. 

1. Don’t invest more than you position size limits on a trade

2. Do not violate this rule

3. Set a maximum position size to limit exposure to a trade

4.  Making one entry at current price and another with price improvement seems to meet my impatience and needs in a successful way.  Work to use patience to get price improvement improving results of trading on the first entry.

5. Be aware I am very vulnerable to falling in the trap of over investing by my nature and need to follow these rules.

February 25, 2008 - Posted by | Stock investing links, ideas, and opinions.

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