Protecting Profits

You're in the green - you're actually making money on the stockmarkets. But you are simply breaking even... why? Because you are simply returning your profits back into the markets. A part of trading successfully is managing risk and consequently preserving and protecting your profits. You must trade with a plan - a part of that plan being an exit plan... a stop loss plan, a plan that tells you when to get out when your initial technical analysis that signaled an entry point fails. That is the time to execute your exit plan - if the trade goes sour.

The loser trader would simply hold on, changing their technical analysis, blinded by fear and greed: the fear of losing money as well as the greed for that lost money. Of course, when you go changing your view, while you are in a losing trade you are simply fooling yourself. You want to be always right. You are the best trader! You were on a winning streak! You are always correct... sure, but not now.

The lesson here is to act in a business-like manner when executing your trades. Having a business plan that tells you when to enter and exit your stock trades. Being a man when the time comes, cutting your losses - and preserving and protecting your profits for the long run.