Former RightLine CFO Dot Ammons trading and investing philosophy compiled in an easy to understand e-Book for Short-Term Traders and Long-Term Investors alike ………
Mistake #1 - FLYING BY THE SEAT OF YOUR PANTS
"Those who are serious about short-term trading treat it as a business and, as a result, usually profit. If not, they get out quickly as they would in any other business situation. On the other hand, there are those short-term traders who have "riskable" money and choose to put it in the markets rather than take it to Las Vegas. Those who consider trading a game of chance are gambling and their results are usually left to blind luck."
Mistake #2
- RIDING LOSSES
"To become a profitable trader you must learn how to recognize bad trades and get out of them quickly. Once you focus on cutting losses early, you will notice that your trading account stabilizes and begins to grow."
Mistake #3 - BETTING THE FARM
"Losses are part of short-term trading. It's how one manages them that will separate winners from losers. If, for example, you adhere to not risking more then 2% on any one trade, then theoretically, with enough capital, you could be in 50 different stock positions and it would take being wrong on ALL 50 positions to bust out of trading. Increase the risk parameter to 10% and you are looking at only 10 positions. Whether or not you are trading the "right or wrong" stocks, 50 chances to hit it right vs. 10 are much better odds."
Mistake #4 - BUCKING THE TREND
"Trading should never be viewed as a game of chance, but since there is risk involved, it is a numbers game. We're not gamblers; we are traders and we need to consider every possibility that will increase our odds of success and avoid possibilities that are likely to hamper our victory. So how do we increase the chances of finding the right stock?"
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