Learn to cut your losses and move on from failed investments from "summary" of The How to Make Money in Stocks Complete Investing System: Your Ultimate Guide to Winning in Good Times and Bad by William J. O'Neil
When a stock you own starts to decline in price, your first instinct may be to hold on and hope that it will bounce back. However, it is crucial to recognize when a trade is not going your way and cut your losses before they become too large. This is a key principle in successful investing – knowing when to exit a losing position. It can be emotionally difficult to admit that you were wrong about a trade and take a loss, but it is essential to separate your emotions from your decision-making process. By cutting your losses quickly, you free up capital to invest in better opportunities that have the potential for greater returns. One common mistake that investors make is holding onto losing positions in the hope that they will eventually turn around. This is known as "averaging down," and it can be a dangerous strategy. Instead of throwing goo...
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