The effects of fear on one’s behavior are obvious, limiting one to the point of complete immobility. If you can’t execute your trades properly, even when you perceive the most perfect opportunity, it is because you have not released yourself from the pain contained in the memories of past trading experiences and because you still don’t trust yourself to act appropriately in any given set of conditions. If you did, there would be no fear or immobility.
– Mark Douglas, The Disciplined Trader
The majority of unskilled investors stubbornly hold onto their losses when the losses are small and reasonable. They could get out cheaply, but being emotionally involved and human, they keep waiting and hoping until their loss gets much bigger and costs them dearly. In a similar vein, investors cash in small, easy-to-take profits and hold their losers. This tactic is exactly the opposite of correct investment procedure. Investors will sell a stock with a profit before they will sell one with a loss.
– William O’Neil, How To Make Money in Stocks
If you have never had your limits tested, should a big loss occur, how will you know you can reach deeply enough into yourself to find a sense of identity that transcends your financial status? Or are you just a 30 percent loss away from feeling like a ’failure’ and ending up in my psychotherapy consulting room?
This is why I argue for knowing your own personality tendencies and seriously considering them in your online investment decision making. If you already know that the terrible anxiety of financial loss would be more than you can mentally and emotionally tolerate, this concern must be weighed heavily in the risks you take.
– Steven Hendlin, The Disciplined Online Investor
Overconfidence is no more destructive to trading than lack of confidence; but neither is helpful and both result from an intrusive ego.
– John Percival, The Way of the Dollar
When sharp losses in equity are experienced, take time off. Close all trades and stop trading for several days. The mind can play games with itself following sharp, quick losses. The urge to “get the money back” is extreme. Never succumb to this.
– StoryTeller, TMF boards
The commonly held statistic is that only 10% of traders are profitable. What most don’t realize is that only 10% of that 10% win consistently and are proud of their return. That means only 1% of all traders win big consistently! To join this elite club, it is obvious that you have to be doing something different than the other 99%.
– Stephen Cox
Money does not give a trader more comfort, because, rich or poor, he can make mistakes and it is never comfortable to be wrong. And when a millionaire is right his money is merely one of his several servants. Losing money is the least of my troubles. A loss never bothers me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does the damage to the pocketbook and to the soul.
– Jesse Livermore, Reminiscences of a Stock Operator
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