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Honor the Discipline!

Posted By Barry Ritholtz On June 12, 2006 @ 2:25 pm In Apprenticed Investor,Technical Analysis,Trading | Comments Disabled

Last week, I mentioned I made a QQQQ purchase ("toe in the water") [1]; 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.


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[1] a QQQQ purchase ("toe in the water"): http://bigpicture.typepad.com/comments/2006/06/trading_versus_.html

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