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Mistakes Made when Buying Stock
There are cases in which we judge that the price of a determined stock has reached an extreme low and we buy. To buy in a market that has gotten down to its low is being presumptuous since this implies we have the power of guessing where the change of tendency is going to occur. Then we start to wait anxiously for the market to show us that we were right and recompense us by changing the direction of this descending tendency. Obviously this will not occur so rapidly and we will stay resisting the show of seeing it slide down, day after day, the price of our stock that we thought was cheap in that time. Once the loss becomes too great, we will remember that we had committed ourselves to cutting off losses quickly, and convince ourselves, only then, that it would be better to sell them and lose, telling ourselves that it would be better to recover it by buying another stock, which will definitely go up the next time. The question is, what is it that makes the loss be so difficult in the right moment? Another bad mistake that is often times made is to try to make up a bad decision of having bought a stock that was in descent by buying more stocks at even lower prices, to be able to improve the average price of the buy. What is achieved with this is probably making the mistake of having chosen a stock that was in descent, but we have not really corrected the bad decision. The question is, why are we always more willing to fix our mistakes so that they are not noticed than to actually correct them in the right way? To make matters worse, it will often occur that we guess having bought an ascending stock, barely judging that it has given us a few points of profit, we then bid it off very quickly to bring that virtual gain to our physical world of “bills”. In that moment we will feel that we have done it wisely, and congratulate ourselves. Then we see how day by day, that stock, right in front of our eyes continues to ascend multiplying the hypothetical profits that we would have obtained. We will not be able to keep on buying more of these stocks which had shown it ascending cycle. A good player should let this spree continue when it is winning, and step out when he starts to lose.