Some Wise Thoughts on Trading

Dan Fitzpatrick is a sharp technical analyst and trader who writes for the website RealMoneySilver.com and has his own site, Stockmarketmentor.com (I subscribe to both) He recently posted this on the Real Money Silver site and I thought it was worth passing along.

"Embrace the notion that you will never catch it all. A common mistake made by untested traders is becoming increasingly excited as their stocks move higher and higher. They regret not buying more when the stock was lower. They then pile in to "make up" for their initial conservatism.  At some point, they've got a massive position in a stock that has been running...but their cost basis is near the current price. It is too high! At that point, any pullback in the stock creates panic. They've turned a good trade into a bad one.

If you continually prune and trim winning positions (and never tolerate losing positions), you'll always be on the right side of the risk curve. Learn to take some profits on the way up, even though you stand the chance of regretting your adherence to risk management.

Men, strive to trade like a woman, not like a jock.

Most women hate to lose money. Men tend to treat losing money as an affront to their manhood. They'll tolerate big losses because they think it's macho to do so. Actually, it's stupid to do so. But then...there is not much difference between machismo and stupidity, is there? The best traders respect the risk they are taking. The worst traders ignore it.

Those of you who are pilots know this saying well: "There are old pilots. There are bold pilots. But there are no old, bold pilots."  Trade to make money. If you want to prove your manhood, join the UFC and challenge Chuck Liddell.

Again...you will never get it all. Strive for the middle 80%."

Thanks, Dan.  Good stuff!