Intelligently Playing the Market

Losing some money today was expected. After a 500 point day in the Dow, it is expected that people will cash in on some profits. We really aren't too far away from our 6500 low 2 weeks ago. It is smart to take some off the top after a rally like we have had. One of the primary rules in investing is that you never profit until you sell. Taking profits out of a rally can be a good thing. We start to instill the emotional aspect of winning again and it feels good. However, this does not mean to cash in on everything. If a stock goes too high too fast, it is sure to correct itself. Remember to set that limit and then buy again after a 5-8% drop. This ensures you take that profit and then get in again at a lower price, essentially saving and making more money.

Losing hurts a lot more than winning. We think about what could have been and do not move on. Another great rule to stay emotionally balanced is to sell and not look back. After that sell goes through, don't torture yourself by seeing where the stock later ended up. No one knows what is going to happen after they sell. Losing money on a stock is not something to cry and then forget about. It is a learning opportunity. The best investors turn their previous failure into a future success. Learning opportunities are everywhere. You have to think smart and improve upon past mistakes to make cash money.