THE GAMBLER MENTALITY
I often use my “Casino Conundrum” to illustrate how important it is to know your trade exit strategy and concerns BEFORE entering a trade. Again, anyone can enter a winning trade, it’s knowing when to get out that determines your maximum profitability,
Assume someone goes to the casino to play a few hands of Black Jack. When is it a good time leave? Here are the scenarios that one must consider, and some of the problems facing the “gambler”
If the Black Jack player loses money, what is the overriding emotional thought? Is it to gamble more to quickly regain the losses? This is often the case; therefore, to the gambler leaving when “down” is not the time to leave the casino. Emotionally, they are leaving as a “loser”.
If the Black Jack player sticks a big win what is overriding emotion?…..
If the Black Jack player is even after a couple hours what is the overriding emotion?…
See, it is NEVER a good time to leave the casino when the “gambler mentality” kicks in. Therefore, ALWAYS know your exit point and concerns BEFORE entering a trade.