FLASHBACK FRIDAY: SELLING IS MORE DIFFICULT THAN PURCHASING
Have you ever wondered why selling is harder than buying? You may want to revisit the investor psychology. Assess yourself. Review your personality, trading skills, risk appetite, and emotions. Chances are these factors may be affecting the way you invest either in a positive or negative way.
In today’s Flashback Friday, let us revisit the rationale behind the notion selling is much challenging than buying.
Many investors tend to place too much confidence on a specific stock, presuming the price would continue its upward trend. Ascribing to this idea makes you overlook the underlying factors and situations affecting an instrument’s performance. Overconfidence happens when an investor believes his capacity to pick good stocks is the sole reason for scoring such gains or revels on a streak of advances. Remember that sticking to that mindset can take you nowhere, which can end up erasing some or all previous profits.
Justifying a bad investment decision is another. Some investors find news reports, economic data, or any other evidences just to support a not-so-good trade even if the stock price is dropping steadily. It does not make sense to retain a losing investment. It is not sensible to lose your capital as well.
Let’s add to the mix all your bad traits or the mistakes you have committed in the past. The culprit? Making impulsive decisions without doing sufficient research and analyzing your capability to invest. If not corrected, you may lose the entire trading capital.
Now that we have discussed the reasons behind the aforementioned conception, you only need to do this one very important step: develop a well-laid trading plan. The plan should outline the following: holdings, trading techniques, damage control, risk appetite, financial goals, and entry and exit rules. Forget not to jot down all your trades, good or bad. Evaluate your trading performance as well. Record everything in a trading journal. And stick with the trading plan, of course. You can either improve or overhaul the entire plan.
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