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Afraid to pull the trigger. This is related to the first problem. But sometimes investors know they want to buy and have done their analysis but still have problems actually entering the trade. I mean, of course, that while they know what menus to click on, they can't bring themselves to go ahead and take the final step and "pull the trigger" by entering the trade. |
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This difficulty was made into a humorous commercial by the discount broker E-Trade. A rather young investor sits in front of his computer monitor with his index finger shaking over the mouse, but is unable to click it to enter the trade. He paces back and forth across his room, does jumping jacks to deal with his anxiety, and makes a number of premature passes in front of his monitor before he finally works up the courage to press the mouse button. The tag line is, "Be not afraid." |
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I like this commercial mainly because it is the first one by a discount broker to address a common problem of online investing rather than just enticing everyone with the riches to be made. |
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While the fear of execution is fairly common for many beginners to online investing, it is not really discussed. This piece acknowledges directly that emotions and, indirectly, investor personality and temperament, are part of the online trading experience. |
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Afraid to sell when trade goes sour. According to popular stock market lore, this is the single biggest problem for investors in general. This includes online traders who hold positions as day traders and short-term position traders, as well as longer-term investors. |
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Selling a losing position requires admitting that we have made a mistaken judgment. Since this is tough for many of us to admit, we hold the position too long and lose more and more money, as we ride the position down to the depths of hell. |
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I, like almost all investors at one time or another, am guilty of committing this error myself, and continue to hold a couple of "dead money" losing positions that I let get out of hand years ago. One of them, Pairgain Technology, my wife won't let me forget, reminding me with every new moon how much I have lost in this stock. The interesting thing about my continuing to hold this loser is that part of my rationalization for doing so is based on remembering it as a real winner. The other part of my excuse for stubbornly holding on is my firm belief that the company will most likely sooner, rather than later, be swallowed up by a larger company, in which case I ought to recoup my initial investment. |
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