Change of Plan

I mentioned in a earlier post about changing your positions as facts and circumstances change. But let me differentiate between changing facts and changing your mind. As the economy picks ups or continues to decline traders should adjust. But when your positions starts to lose money do not change a trade into an investment. Also, if the movement (earnings, acquisition, dividend,etc) takes place or does not come to fruition move on to something else. Traders enter the market optimistically and when fortunes turn, they become Warren Buffet reading annual reports and dissecting financial statements to reaffirm their position. I believe in proper fundamental analysis and long term investing. However, the trader must know themselves and there trade or investment. Also, the trader should establish a limit sell or stop loss BEFORE you buy or short. Establishing a sell or stop after can be a costly error if the trader lacks discipline.