Tuesday, January 31, 2012

Cramers's 4th Commandment of Trading.

Cigarettes have gotten expensive.  Don't burn your money with bad trades!
Jim Cramer's 4th commandment of trading is:  'Never turn a trading gain into an investment loss.'.  Don't over stay your welcome in a trade.  Remember trades are different from investments.  The whole point of a trade is that it has a catalyst.  Once the catalyst has taken place and the stock reacts to the upside or the down side it is time to take profits or minimize losses. 

Sitting in the stock because it has a great reaction to a catalyst can lead to over staying your welcome and eventually the stock can end up losing you money.  If you are trading stick to your plan, take profits or minimize loses.  Do not fall in love with the stock you trade and end up over staying your welcome by making a winning trade into a losing investment!

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