How to Break a Losing Streak

Most people find it hard to believe that I rarely invest and trade stocks. One of the reasons for this stance is that I do not want to get involved in securities profiled in these and other pages.  It sends a bad message, in my view.

When I do trade, I am patient and prudent. I always use limit orders to buy and establish stop-loss orders on sales.  My biggest mistake tends to be selling too soon, but you can’t go broke taking a profit, as the old saying goes.  Lately, I am off my game and on an annoying losing streak. If I am torn between two stocks I always seem to pick the wrong one. These maddening situations happen to us all, and like a baseball player that is on a hitless streak, we must be diligent to return to tip-top shape. Here are some tips to get you (and me) back to where we belong.

Stick with Familiar Names

We all have our favorite stocks to watch and trade. Like comfort food or a warm blanket, we relish in knowing how they trade. If you find yourself on a losing streak, build your confidence and your account balance by trading or investing in those stocks that have provided you gains in the past.

Spread the Wealth

If you are a putz like me that picks the wrong stock when down to two choices, remove yourself from this tortuous situation and buy both. Percentage gains may be smaller but achieving success is the best way to break a losing streak. 

Take a Breather

We are often complacent in our due diligence and stock-picking approach.  Work harder on the due diligence side, monitor the stocks on your watch list more closely and determine why these stocks are moving in their given directions.  Trends tend to be short term in nature, which is why losing streaks occur . . .  which is why not all strategies work all the time. It may be prudent to sit on the sidelines until your approach is in favor again.

Treat Investing Like a Marathon, Not a Sprint

Too many investors and traders in the small stock segment of the market treat transactions like a high-class form of gambling and are focused on short-term gains. This approach can cloud  one’s thinking as stocks trade based on long-term patterns, news, and occasionally on specific events.  Applying short-term methods to long-term opportunities rarely works. With each stock you buy, be prepared to go long for months or years at a time, as it may take that long to achieve meaningful positive returns.  If you can generate a quick return, view that event as a bonus and not the norm.

Stay Positive

There are always ways to generate positive investing returns -- even in bear markets. By keeping a positive attitude and building an aptitude for discerning what sectors or types of equities are performing profitably, you too can record positive gains in the face of adversity by emulating the successful approach.

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