Almost all the time I come across players who allow rear to grip them once a big bet goes against them.. More often than not this fear phenomena is a result of overtrading ie buying beyond one's means and holding power...this "uneasy " fear factor feeds on itself and may sometimes result in irrational actions like selling off everything ( including good shares ) just to feel at ease again...It is this panic selling phenomena that a trained investor or player should avoid...question is how ? My thoughts are these...
A) Don't buy beyond one's comfort zone no matter how tempted you are for quick profits
B) For speculative ( and hence normally poor quality ) stocks buy with an eye to sell almost immediately if it goes against you...the more you buy the quicker you should exit ,either way
C) For quality stocks practise the art of cost averaging .possibly with wider bid spread for each entry level.
( provided you didnt use up all the funds from start ) ...A good stock will always rebound from its low ...it is a question of when , not whether it will or not, all unit trust and fund managers do that...
D) resist the thought that by selling a good loss making stock ,you can hitch a ride on another stock ...chances are the one you are selling may rebound and the "exciting " stock you now buy may be under "distribution " pattern by operators...in which case you will suffer a double loss !
E) Be patient...Broad market forces cannot be controlled...relax and wait it out !
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Thank you
Chris Choo.
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