Never Fall In Love!
Recently I watched my favorite football team lose a vital game.
I simply love this team.
I became so emotional about it; I thought "?this isn't good for my health". Can you believe that, but that's how we get when we are passionate. I simply couldn't believe (I didn't want to believe) they could lose.
However, as a committed fan, I was going all the way with them. If they were going down, I was going down with them. After all, you don't give up on your team simply because they don't win every game. On this occasion, I was so wound up, willing them to win, knowing all along they had blown their chances.
I really should have walked away from the TV. However, I stayed for the pain. Oh, the exquisite agony. At the end, my shoulders and head were down, I felt like I'd run a marathon and deeply felt the loss for the team and myself. Was there life after this game?
I should have been saying to myself "? they've done well considering they're a young team, they've done better than expected, so save yourself the heartache and face the fact? this season is not theirs? emotionally detach yourself."
As I was lying on the settee, absolutely exhausted, analysing why I'd put myself through it, my mind went back to my early days of trading. We all go through this and hopefully only in our very early days - when we learn a few painful lessons. For some, it's enough to put them off trading forever.
We buy a stock, believing the price will go to a higher level. We know it will rise, because it's a blue chip and the indicators all line up. There's no chance this will turn against us. It's a stock we love because we've followed it for some time and it's a household name - it's been a great performer for years. Of course, we've got our mental stop loss sorted out before we go into the trade.
However, it does turn against us. Because we love the stock we see our stop loss taken out and what do we do? Nothing!
We love this stock and it will definitely bounce back. But it doesn't and like a sports fan, you stick with your "team" and with every decrease in price, you feel that pain and you rapidly go down too - you too are a loser, not only in the sense that you've gone against the rules, but also you've lost your money.
Just like your favorite team, you can't win every time. So, to protect yourself against losing, get out when your stop loss tells you - don't let your love for a stock paralyse you. In this way, you'll sustain a small loss, but have enough money left to go in on a winning trade.
So, never attach emotion to a trade - treat them all the same and trade your strategy. And always have a stop loss in place. Don't rely on mental stops as love can make you do crazy things!
NEVER FALL IN LOVE with a stock.
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The above comments are offered for educational purposes only. We are not providing you with financial advice. We are simply sharing with you what has and hasn't worked for us personally. If you wish to trade or invest in the stock market you should obtain advice from a registered licensed advisor.