Saturday, January 08, 2011
When I was first starting out as a trader, I sometimes traded impulsively - where I tried to use my "gut feel" to execute buys and sells. What happened every time was that I lost money and got stressed.
This also includes jumping in and buying a stock because of a hot tip or because you like the product. Now, don't get me wrong - I do buy stocks based on analyst recommendations or because I like to shop there. But, I follow my Stock Trading Riches system so that I know at which prices I will buy and sell, and at what quantities. So, I am never trading impulsively.
No matter what happens to the stock, I can fight the emotions of fear and greed because I have an objective way to calculate my buy and sell points.
I'm not saying that everyone should use the Stock Trading Riches system - because different systems appeal to different personalities. Even if system A is better than system B, you would be better off using system B if it appeals better to your investing philosophy.
But, the key is that you do need a system.