Honor the Discipline!

Monday, June 12, 2006 | 02:25 PM

Last week, I mentioned I made a QQQQ purchase ("toe in the water"); I also suggested that "since its now almost in the money by a half point, I'll move my stop loss to breakeven. I'll average up if we rally, and hold the position until it starts misbehaving."

As it moved higher, I also moved the stop loss with it. When it broke $38 today to the downside, I was stopped out for a very modest gain.

If you bought something for a trade on Thursday's plummet, you may be getting close to breakeven on it (depending upon what you purchased). Your discipline should be to never let a winner turn into a loser, and never let a Trade become an Investment. You can always repurchase something back if it starts behaving better later.

For now, if you took something in for a quickie, and it ain't working out, you should be thinking in terms of capital preservation, not the next turnaround or bounce.

Monday, June 12, 2006 | 02:25 PM | Permalink | Comments (9) | TrackBack (0)
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Even though I don't trade, nor really invest, I found this post enlightening. Following this discpline prevents the sunk cost fallacy from seeping in.

Posted by: crack | Jun 12, 2006 2:36:27 PM

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