Are you a Ruthless Trader?

Could I be a ruthless trader?

Ruthless
adjective: having or showing no pity or compassion

So what do you think, are you a ruthless trader?

Or do you nurture your stocks? Give them a second chance to perform? Maybe even a third. After all, everyone deserves a second chance, don’t they?

Perhaps you cheer your stocks on from the sidelines. Offer encouragement. Even when they are not performing.

But here’s the thing.

The stocks you own are not your friends.

They are not your children or a loved one that you cradle and support when they are down and going through a rough patch.

Never should you personify your stock portfolio as having feelings or a heartbeat. No matter how often a company Director thanks you for your great support, even when their share price has plummeted 50% over the past 12 months!

When it comes to trading you need to be ruthless.

If you had an employee that was losing you money and under-performing, you wouldn’t hesitate to show them the door. This is how you need to approach your open positions.

Show ‘no pity or compassion’.

There is also a lot of wasted energy, worry and stress when it comes to owning an under-performing portfolio.

So why do so many traders hold and hope?

A psychological question for another time, yet the fact is the more we become attached to something, the more difficult we find it is to let go.

So who can we give this job to, if we are finding it too difficult to do ourselves?

Simple.

Your stop loss.

If your stop is hit, you exit the position. No questions asked. Shown the door. Sacked!

There is no waiting for a turnaround. No praying. No cheering it on, or thinking you know exactly what it is going to do from one day to the next.

Your stocks are not your friends.

If they are not performing you need to get rid of them.

Be ruthless.