There are numerous people who will tell you how to make money in the market. But what you don’t often see, however, are ideas written on how to lose money. “Cut your losers and let your winners run” is common stock market trading advice, but how do you determine when a position is a loser? … Read more
Short Selling. Is It Unpatriotic? Short selling is the opposite of normal (long) stock positions. If you buy a stock hoping it will go up, you are ‘long’ of the stock. But if you think the stock will go down, you can sell it first, and buy it anytime you please. This ‘short selling’ is … Read more
So you want to become a full time stock trader? This is the dream of many. The problem is that it is very easy to be wiped-out in the learning process. Some lucky people have the skills to make money from the stock market and keep it, knowing very little. This is because they are … Read more
People are overconfident. Psychologists have determined that overconfidence causes people to overestimate their knowledge, underestimate risks, and exaggerate their ability to control events. Does overconfidence occur in investment decision making? Public stock or security selection is a difficult task. It is precisely this type of task at which people exhibit the greatest overconfidence. Are you … Read more
If you havent already, it might help to first read the background on Overconfidence in Trading. Psychologists have found that people become overconfident when they experience early success in a new activity. Also, having more information available and a higher degree of control leads to higher overconfidence. These factors are referred to as the illusion … Read more
