The stock has gone up, a lot. Sure it has, but so have others and many will continue going higher.
How greedy are we that we can't let a stock that's run over 100% have a 10 or 15% cushion to make sure its uptrend is invalidated? That method has served us well thus far, why abandon it now? Because we have a nice profit and might as well call it good?
Look, I'm a practical guy, I understand the logic. We've made a lot of money. But why sell your winning position because it's gone up? Isn't that the point. You bought it because you thought it would go up and it's started to, but you really think you can pick the top now? People try to do this constantly and it rarely works. What does work though is holding onto winning positions and eliminating losing ones. Picking tops, trying to catch every wiggle, those very rarely work.
There have been many places in the past 2-years where the top-callers have foreseen its demise. Yet all it does is move sideways for a couple months and then resumes to new highs.
Look, I'm a practical guy, I understand the logic. We've made a lot of money. But why sell your winning position because it's gone up? Isn't that the point. You bought it because you thought it would go up and it's started to, but you really think you can pick the top now? People try to do this constantly and it rarely works. What does work though is holding onto winning positions and eliminating losing ones. Picking tops, trying to catch every wiggle, those very rarely work.
There have been many places in the past 2-years where the top-callers have foreseen its demise. Yet all it does is move sideways for a couple months and then resumes to new highs.
AAPL is just an example, the larger trouble is most people sell their best ideas early to "protect profits" and hold their worst ideas too long "hoping" it will come back. Selling winners and holding losers, that's a recipe for disaster. Or as legendary investor Peter Lynch has said, "that's like pulling the flowers and watering the weeds".
This is a common trap that the overwhelming majority of traders fall into. Their accounts are too small for highly active trading and commissions from movement like this will eat up their returns. We are our own worst trading enemy. It's a repeating and self destructing cycle.
The more effective and reasonable solution is to have a process that rewards winning ideas and eliminates losing ones. It should stick to the single most important and often disregarded principle of successful investing:
Run your winners and keep losses small.
If you can rethink your investment strategy to reduce market movement to only what is necessary, you will stop hemorrhaging your account, and put yourself in a position to make consistent money in the market.
Follow @ZenTrends on Stocktwits and Twitter
Run your winners and keep losses small.
If you can rethink your investment strategy to reduce market movement to only what is necessary, you will stop hemorrhaging your account, and put yourself in a position to make consistent money in the market.
Follow @ZenTrends on Stocktwits and Twitter
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