Today's Quote: “Stubbornness does have its helpful features. You always know what you're going to be thinking tomorrow." Glen Beaman.

A true story. A long, long time ago, a trader decided to scalp a high-flying $220.00 stock. The trade did not work and the stock quickly hit the stop. This had happened to the trader before, and this trader had learned that it was often the case that the stock would come back later in the day. So this trader did not take the stop. This trader became accustom to not following stops because it was a bullish market.

Well, this day the stock did not come back by close. The trader checked out the daily charts of his stock and of the market, and saw big up trends and decided it would be unwise to sell at a loss, when the stock would likely be profitable soon. So he held it as a ‘swing trade’. Not the original plan, but why take a loss in a bull market?

Well as luck would have it, the next morning it opened down. As the stock fell further and further, the trader had a sick feeling in his stomach every morning. He also was missing many other plays because he was mentally tied up with one stock every day, and a good portion of his money was also tied up with this one stock. Surely, if he sold now he would be selling near the lows. Also, the loss was far too great to take now. After all, it is not ‘really’ a loss until you sell it, right? All the reasons the trader had for holding were stronger than ever, or so he thought.

Well, it did not take long before the words ‘bear market’ were in the headlines and the stock was at $15.00. The trader very likely even added some stock on the way down on one or more occasions. Unfortunately, the trader is not real proud of lowering his average price from $220.00 to $205.00 with the stock now at $15.00.

Who is this trader? Well, he or she is mythical, but his story is not. This is the story of a very high percentage of people that eventually seek help from us. We have heard this story many times. Many were not fortunate enough to be able to seek help. Their trading careers ended early.

So do not be this trader. We do not know if the market is going to rise of fall in the upcoming months. You can play the odds as the charts form, but do not be stubborn about being wrong. After all, you are not wrong, you took a well planned traded that hit one of its 2 logical ending points, a stop or a target. Note the timing of this lesson. Stops hurt a little. Big losses hurt a lot. Hanging on beyond that ends careers.