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Hello Readers

The above statement may be obvious but not selling falling shares is one of the main reasons many traders struggle to make a profit from the market. Knowing (or having decided) when to sell of course is the key, but if you have the key, do you then turn it?

MGX was a stock I bought for the portfolio earlier in the year. (you can check the trade in Peter's Portfolio on the website) From a charting technical perspective it looked pretty good. The price was rising, it had volume support, the price had made a 52 week high, which in a bull market can have a 50% plus win rate. Also fundamentally the stock was respectable too, it had a reasonable PE, paid a dividend, and fundamentals presented by analysts looked ok. The resources sector was also showing some life...how things can change, and as a trader or investor you need to change with it. Taking into account all those positive factors I just mentioned about MGX, one could be forgiven for hanging on to the trade, or could they? The market punishes those that do not listen to it, in this case the market (using this systems exit) was saying "sell MGX" and then went on to show you why it told you to.

The market is the boss, do what the boss says.

One of the reasons I trade for a living is I like to be independent. I don’t really like being told what to do. From a trading psychological perspective this attitude is very bad for a trader. I was not very good at listening to the boss and doing what he/she said. However after years of trading I realise there is only one boss when you trade, and it isn't you! So when the boss tells you to do something, I advise you listen, otherwise they will kick you hard.  Boss market has been kicking hard traders holding onto MGX.     

All good workplaces have methods or systems designed to create flow, create outcome and get the job done. It is difficult to take a sell signal if you don’t trust the method, if you don't trust the method you use, then simply you could have one or two problems. You either have a method that does not suit you, so you can’t stick to it, or you have some psychology work to do, to help you stick to a method that may be good for you, but you self sabotage.     

Next time I will look at a problem many traders have, not buying, why you should buy when the boss tells you to.

Peter.

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