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traders can learn from some of the thinking of long-term investors and, conversely, how long-term investors can learn from some of the thinking and tools of short-term traders. |
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An overall investing philosophy that allows for the ups and downs in the market and your own portfolio. How to manage catastrophic "all or nothing" thinking when it comes to your trading fortunes. |
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Our approach to the issues we will focus on will be one of balancing opposites. We will not assume there is just one right answer to solve a problem or one right stance to take each time the same problem arises. Instead, we will adopt a balanced way of thinking that allows us to respond to each new situation in a flexible manner. We will assume that being right will be defined by the particular situation in which we find ourselves. |
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In fact, it is the tendency to do the same thing repeatedly, no matter what the situation calls for, that gets us in trouble when trading. It accounts for many of the habitual conscious and unconscious choices we make that lead to bad trades. |
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For example, let's say you are a position trader (or speculator) who likes to hold a stock for a few hours, days, weeks, or even months and then capitalize on a special situation. (This, by the way, is my own style of trading, combined with some long-term holds). |
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Your thinking is not the same as the day trader, who does not care about these situations except as they relate to the minute-to-minute momentum of the stock. Nor do you necessarily care about the long-term fate of the stock like the buy and hold investor. Instead, you want to take advantage of a specific event related to the stock. |
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Maybe there is a stock split coming. Or news about the company that you believe will make the stock jump. If you are not very trusting of making your own decision about whether to buy this stock, you may find that you are on the stock bulletin boards, seeking confirmation from others that your thinking is correct. |
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Some who are unsure of their own thinking have great difficulty making the decision to buy without this confirmation from others. They become quite dependent on it. And often, they are |
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