Monthly Archives: July 2016
Optimise the size of the winning trades not the percentage of winning trades!
We all like to be right. It’s good for the ego and that’s what they teach you in school. The more questions you get right the better your marks and the higher the chance that you can study medicine! We know it’s good to be right but that’s what causes us lots of trouble in trading and investing.
How to take a loss
Today’s note is about realising a small, manageable loss in a share investment so that the loss does not get out of hand and finishes with a devastating loss of capital. We all know that we must “let profits run and cut losses short” but doing this (both parts of the above quote) is psychologically hard and many investors cannot do this so that their share market performance is lower than the benchmark return.