Egg 8 - The Chopping Block
Don't lose your head if the stock price suddenly drops. But do remember the market can kill you worse than the farmer.... The market can kill your eggs without getting plucked !
Mistakes will be made, and you will make plenty of them. Just Chirp it away and start over again is sometimes the best medicine. Don’t trade for a period. Get yourself back into a positive mode. Then start making smaller choices and smaller trades. Re-think and ask yourself, “Why did I do that trade in that manner?” What could I have done differently? A couple of smaller positive trades will help you in regaining the confidence again.
Focus on your Trading Plan and Goals. Usually, you may be over-confident and slowly veering away from the Plan! Get back to basics. Review the positive and negative trades you had. Which Candlestick Signals and Patterns work better for you? Try to adjust slightly and reduce the “type” of pattern to just a few to follow and focus on. Ask yourself, “Was the trend up or was the trend down? Relax, take it easy, and after a few years you will have a base to help you in deciding which months you trade better in.
Perhaps, having a 2-3 year trial period, still trading but focusing on meeting year 4-7 goals, or years 4-10 goals will work better for you? Which stock price ranges do you appear to make more profits with? Do you make more profits trading more often with smaller number of shares, or having a fewer number of shares but higher stock prices?
In general, I find the smaller stock price ranges $4-12 to be best, for Me! Although, trading stocks under $4, the stocks can move extremely fast so it’s best to be on top of the trading day.
As a general rule for brokerage accounts with Margin accounts you can short a stock (buy a stock going down in price (short or shorting) thinking the price will go down, without owning the stock, and 401 accounts usually do not allow for shorting stocks, only the buying, then selling of stocks.
Generally speaking, stocks with a price less than $5 cannot be shorted on a Margin Account. This means that the price must go down for you to make $.
I myself, do not short at this time as it requires a “reverse” type of thinking, and it is hard enough to buy and sell stocks that go up. Check with your account representative for specific information regarding the use of Margin Accounts.