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Monday, February 9, 2009

How to Make Money in Stocks Part 5

If Your Selection Timing Might Be Wrong

In the stock market, you absolutely can’t win either unless you have a strong predetermined defense to protect yourself against large losses. This

May surprise you, but if you invest in stocks, you are going to make a never ending number of mistakes in your selection and timing of purchases. These poor decisions will lead to losses, some of which can become quite awful. No matter how smart you may think you are or how good you believe your information or analysis is, you simply are not going to be right all of the time. In fact, you will probably be right only half the time, or maybe WORST, but you can still WIN!

THE SECRET TO WINNING in stock market is to lose the least amount possible when you are not right. I other words you must set CUT LOSS position!! I suggest you consider writing down the price at which you expect to sell if you have a loss, as well as the expected profit potential of all the securities you purchase. By writing it down, you will focus your attention later on the fact that the stock has reached one of these levels. Like I shows my CUT LOSS points in this BLOG. I usually used 5% below my purchase points!! BUT THE LIMIT IS 8%!!!

VERY - VERY RISKY THINKSSS, “I’m Along Term Investor, I am not worried, I am still getting MY DEVIDENS”. It is naive because good stocks can go down as much as might not be good stocks in the first place. NONONO AVERAGE DOWN.

In short, if you want to make money in the stock market, you need a specific defensive plan for cutting your losses quickly and you need to develop the decisiveness and discipline to make these tough, hard-headed business decisions without wavering.

Remember, there are no good stocks—they are all bad...unless they go up.


boy said...

Very interesting article, i have bookmarked your blog for future referrence.

Roja said...

thx my friend