Saturday, August 1, 2009

Cut Your Winners Short and Let Losses Run?

* Overbuying and overstudying the market confuses your thinking. Limit your input.

In recent days I've been performing a test on your reading and comprehension ability, and how many of you actually read my "dribble", which I hope you do.

I used a line "We cut our winners short and let our losses run". A few bright subscribers wrote "Other trading services teach the opposite...let winners run and cut losses short.

What I was writing was what HAPPENS, not what should be. Joe the Trader, most of all investors, "cut winners short (to make profits) and hold something too long ("let losses run") because they are "sure it will turn around.

The point of my exercise is for you to not "read a maxim", but analyze what you are reading. This is how you will become a trader.