To keep the two activities separate you need to master a few simple concepts.
1. Speculating is a business not a hobby. You must treat it the same as running a business. That means you need to know at all times your working capital, cash flow and percentage return. If you are not prepared to do this go collect coins, it will be more pleasuring for you.
2. Prior to taking a position you have prepared and evaluated all possible outcomes. You will not be relying on a gut feeling or crutches. You will stick with you plan no matter what happens.
3. Hindsight is bullshit. Everything works on paper. Let me rephrase this — everything can be justified on paper. Reality is a much harder judge. Don’t be swayed by second guessing your methods.
4. Whatever you do avoid focusing on how much money you could have made if only…. This is a lot harder to do than it sounds, don’t kid yourself. Conversely don’t focus on how you could have avoided the loss if only…..What’s done is done and each trade is a new trade and does not have the memory of your last trade. Neither should you.
5. Avoid bragging about how much money you made. The market has a way of making all of us foolish. Such behavior forces us to lie when we are losing money to save face. It’s really no one’s business except yours.
Ivan Cavric
Excerpt Taken From
Lloyds Online Banking
ReplyDeleteThe market has a way of making all of us foolish. Such behavior forces us to lie when we are losing money to save face.