When to Take a Loss and Move On
All of us have experienced stock losses. Some more than others. There are times where all you will see in your portfolio is red! I want to talk about stock losses and how they can be affecting your trading. How many of you can agree that having stock losses can put you through some serious stress? I want to help you consider that sometimes you just need to let your losers go, and move on to the next. The negativity that comes from having a losing stock alone is enough to cause huge amounts of stress. Sometimes technical analysis alone isn’t enough to save you from the bleeding, so here’s some things to consider if you’re looking at a bunch of losers.
Typically you’re looking at a stock going down and you’re thinking, “I’ve already lost X amount, I might as well ride it out to see if I can break even”. I’ve said it hundreds of times. You’re already taking a gamble and now the odds are less in your favor. Sure you might catch a break and get some good news. The problem is you’ve entered into a negative territory where you’re now fighting to break even. You must determine if you are losing the fight to the bears, and let it go before it gets worse. Hopefully you catch it soon enough and before it gets worse.
I want to focus more on long term losers. There are too many different factors to take into account when looking at short term losses, and many ways to deal with them. I want to talk about those stocks that have been sitting in your account for weeks, months, years? Yes, I’ve heard of people holding stocks they were buried in for years! I’ve held on to a couple losers for 3-4 months before cutting them loose. One day I decided to just be done with them, regardless of what I thought I just got tired of seeing them. Most of the times I made the right decision, 1 or 2 times I could of waited a bit longer and reduced my losses but to me its not worth it.
Everyone has different goals when it comes to their losers, but most of the time they are technically based, or just purely “I refused to take a loss on this!”. I know that just letting go of those losers can add so much positivity to your trading and help you make better decisions in future trades. Instead of thinking, “I need to make up this loss”, you’ll be focused on your goals again and on your way to other potential profits.
We would love to hear about some of your bad trades, how you dealt with them, and how you felt afterwards?