An Investor
The market has short term players and longer term players. Some become longer term players when the market reduces the value of their portfolio to the extent that they lack the courage to sell and realize the losses. You will also find that taking a loss is one of the hardest things you will ever do! Those who cannot take a loss will usually become investors.
I am not proud to say that this was one of my reasons for losing 100's of thousands of dollars. If you are losing money you must stem the flow! It is the same as watching yourself bleed. There is a limit to how long you can afford to lose money and as they say," there are no big losses that weren't once small losses."
I watched my portfolio decrease from over $300 000 to about $45 000 over a period of two and a half years. I knew what was happening and I knew what I should do, but I couldn't give it up and lived in hope that at least one stock would make up for the others. I can tell you that it has been a devastating personal experience and a very easy situation to find yourself in if you invest in the sharemarket.
I had fallen in love with my stocks because I believed the good news stories, unfortunately the rest of the market didn't and in March 2000 the party was over, but no one told me. When the party is over people sell like crazy and you don't need a bull market to end - this is happening all the time in the market. You may have heard of, "Buy the rumour and sell the fact".
The investor is proud of their portfolio and often people are told by their advisors to just ride out the bad times and try and think long term, because in the long term the sharemarket always goes up. Property investors are told the same with negative gearing being the choice of so called, clever investors. They are told," You might be losing now but it's tax deductible."
When you have a portfolio you can brag to your friends or discuss the ups and downs - especially the ups! There was a time when my portfolio was $800 000. I can tell you that I was very emotional about it. It was a great feeling. This was the beginning of my downfall in the market.
By reading about my experience you have a special insight into the market and personal psychology, that I never had. I was getting educated alright! I was a sitting duck and it was duck season!!
Amazingly, after losing $700 000 I am still able and willing to trade, mainly because I haven't stopped learning. I have tried so hard to control my pride and gain some personal discipline. I've also practiced getting over the loss. I continue to make learning my priority and if you do the same you will make 100's of thousands of dollars and get to keep it!
If you can learn from my mistakes how much richer will you be?
At times you will be on a roller coaster and you will need to keep a firm eye on your plan and control of your emotions, because in this game you live or die by your plan. If your plan is telling you to enter and you are able to enter then do so - you don't have to trade!
Enter if there is a high probability of a profitable trade and your indicators tell you so.
If the indicators are telling you to sell then you better sell - don't consider anything - just sell! Don't wait for the share to go back up - sell! A little profit is better than none and your capital must be protected.
The smart investor who wants to hold will buy protection for their shares rather than let them face the stormy sea. Purchasing insurance can be costly, but then again so can holding shares. The alternative is to write calls, let yourself be exercised and wait for positive sentiment to return before your next purchase.
Wishing you success in your investing,
Joseph Sgro
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"Why Invest in Stocks When You Can Make Money Trading?"
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http://www.tutorhelp.com.au/sharemarket.htmlJoseph Sgro has been trading the stockmarket for 18 years. He also specializes in face to face tutoring as well as online tuition. He is the author of, “Study Skills, For Those Students Who Will Settle Only For Success”.
This article may be published as is and distributed freely.
(C) Copyright 2005 Joseph Sgro
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