The Secret to More Winning Trades is as Simple as Avoiding This Common Mistake

If you're a normal human being, your need to feel good about yourself probably causes you to sell your winners too soon ? and -- your need to avoid feelings of regret, causes you to hang on to your losers too long.

At one time or another, we're all guilty of letting our emotions dictate our investment decisions. But the only way to succeed in the market, is to keep greed, fear, pride and hope away from your trades.

The most successful investors know exactly when they're going to sell a stock, the moment they buy it. Often they use "trailing stops" which move along with the closing price of the stock. It's a purely mechanical decision they make as an impartial observer ? and never based on feelings or instincts.

How many times has "fear of loss" caused you to sell a stock that brokeout the next day? Have you ever "fallen in love" with a stock ? "hoping" it would breakout after an initial 10% pullback, only to end up losing your shirt? Has "greed" kept you in a stock where you wanted 50%, not 20% -- only to have the bottom drop out in a week, letting your profit dissolve into a loss? Have you ever held on to a loser because you wanted to prove your initial "instincts" were right after all?

By pre-determining the maximum amount you are willing to lose on a stock or fund, you can't really get hurt. Equally important, this simple, proven strategy keeps you in a profitable investment so you don't sell too soon and miss out on profits.

In a hypothetical example, let's say you begin with $25,000 in a variety of stocks and funds. The first year was good and you made 25%. Now your portfolio is worth $31,250. You do the same the following year and now your portfolio is worth $39,062. Then the third year you lose 50%.

That would put the value of your portfolio back to $19,531 ? which is less than you started with. Just one year's loss can wipe out two years of great gains.

Now let's say you had used the "trailing stop" strategy during these years...

You had the same $39,062 at the beginning of the third year ? but ? you were using a 15% "trailing stop". As soon as the value of your portfolio dropped 15% to $33,203, you would automatically been stopped out, and would have locked in a profit of $8,203. I'm sure you'll agree, that's quite a difference!

Do this with just a few of your stocks or funds, and you can see how you can easily pocket thousands of extra dollars ? while simultaneously minimizing your losses.

The "trailing stop" strategy is a time-proven tool for completely eliminating any emotions from dictating your investing decisions. The only problem is that it requires a lot of your time and a lot of work on an ongoing basis. If you have 25 different stocks, you may have to make 25 new calculations every single day.

The GOOD news is that now there is a new software program that automatically does all the tedious calculations for you. It can prevent you from taking big hits that can hurt you ? while simultaneously letting your winners ride. Plus, you can now accomplish all this in about 10 minutes a day.

The program, "STOP-Master Portfolio Manager" is a great time saver. It monitors up to 50 positions in your portfolio. It automatically grabs current stock prices off the internet ... recalculates new trailing stop SELL prices as needed ... and completely updates your entire portfolio. When one of your positions hits your pre-determined SELL price, you are immediately signaled with a Pop-Up Alert. Then, simply instruct your broker to sell. No emotions. No needless losses. Greater gains.

© 2004 Empire Direct, Inc. All Rights Reserved

--

You have permission to publish this article electronically or in print, in your Ezine, on your Website, or in your Ebook or Newsletter as long as the Author's Resource Box is included with the article.

About The Author

James M. Clay has been a successful investor for over 20 years. He has shown many people how to use this simple technique to dramatically cut their losses, while simultaneously locking in profits. To find out more, please visit: http://www.AutomaticInvestmentProtection.com

[email protected]

In The News:

Dumped mutual funds? It’s a bad idea  The New Indian Express

Finding A Good Stock

One of the things people are always asking me is... Read More

A Triple Dipper: How to Make 3 Profits on 1 Stock Trade

This is a rather simple strategy with which I am... Read More

Successful Trading ? Taking Profits - Part 2

Suppose your position has made a big move and you... Read More

Discover the Biggest Trading & Investing Online Mistake

Any online investor / trader seeks an excellent off or... Read More

10 Tips For Creating Wealth From the Stock Market

1. Do not spread your money too thin.My friend has... Read More

Gold Fever

Right now there doesn't seem to be any "gold fever".... Read More

Buy Low - Sell High

Now where have I heard that before? I know. It... Read More

Protect Your 401K

Checked your 401K lately? Going back to about a year... Read More

How Covered Calls Turned a Trader Around

Sidney felt sick as she looked at her latest OptionsXpress... Read More

Good Stock Market Tip; Good Return!

Forget making a profit; instead focus on the income provided... Read More

KISS Formula

There are formulas for just about everything, but it has... Read More

The Stock Market Investor?s Worst Enemy

Every stock market investor faces one primal enemy. An enemy... Read More

Complacency

During the month of January the Dow Jones Industrial Average,... Read More

Money, Insanity and Wall Street

Money: the most charged word in the planet. It means... Read More

The Surgeon General

The Surgeon General of the United States says that smoking... Read More

The Seven Mistakes All Novice Traders Make and How to Correct Them

We learnt the following the hard way! If any of... Read More

Downdraft

For the year 2000 we have seen hundreds of mutual... Read More

The Stock Market - Part 1: Believe It Or Not, Its Always Been Your Best Friend And Always Will Be

Regardless of the fact that the world's stock markets have... Read More

Online Trading Strategy: Collecting Cash when Stocks Go UP - It PAYS to Know More than Others

When it comes to stock market trading it PAYS to... Read More

Stock Analysis

I receive emails from Morningstar. This company provides statistics and... Read More

What is a Trading Plan ? and Why You Need One?

How do you make money without picking tops and bottoms?I... Read More

Patterns

The Law of Chaos is the theory of random unpredictable... Read More

What the Hell is a Stock option?

A 'stock option' is a contract between two parties giving... Read More

Hedge Funds: the Good, the Bad, and the Ugly

Alfred Winslow Jones started hedge funds in 1949. He was... Read More

Catnip of the Stock Market

I have watched my cat play with a bag of... Read More