Hi guys, hi from Andrea Unger.
There is a sentence in Italy which is “Sell, gain and regret!” which I could not find in English.
So I don’t know if this exists or not in English, normally the Italian sentence is associated with “Sell in May and go away”, which is a completely different thing but they put them together, but I want to talk about this Italian sentence which is “Sell, gain and regret” where the meaning is “sell”, take your profits and then eventually if the instrument you have goes higher or lower depending on the position you had, and you could have made more money, simply regret but don’t care about it, the important is you put some money in your pockets.
So this attitude, is it correct or not? From my point of view such an attitude is fine with all those guys who treat trading or investing like a gambling thing or a lottery, things like that where they actually just give it a try, if they may make money they are happy, if I lose money they are not happy but they are fine anyway.
But if you approach trading with a perspective of a future position in the trading world such as employment or a full-time profession, then you have to change this point of view because in this sentence there are many hidden traps.
Most of all it goes in conflict with “let your profits run” because if you have to sell and close a position once it’s making some money obviously you don’t let the profits run, and the second hidden message in this is that it doesn’t talk about losses.
So actually it looks like you have to keep losing positions opened waiting till they make even a small profit and then you can close the position, this is just my point of view of course.
Furthermore with this sentence, which again I could not find in English but it’s very well known in the Italian environment of trading and investing, with this sentence “Sell, gain and regret” there is also a sort of no plan meaning, because you are trading without a plan which is extremely wrong because whatever trade you decide to end, you have to do so because of a plan, because you planned to do that because of your reasons whatever they are and together with the entry plan you must have an exit plan.
The exit plan must be to let the position go till a certain take profit or till a new setup takes place or whatever and eventually, also of course even more important, to close the position in case it shows losses before a certain level or the certain amount of losses.
This is the plan, the plan can be wrong of course or at least the outcome in the market can be different from what you planned in terms of profits. You can end up finishing in a loss in which your reaction has to be planned.
So you can mistake your vision your reading of the market but the important is that you have a plan to decide what to do in any case and this “Sell, gain and regret” maybe this is the plan itself but in this case it’s a very poor plan because if you don’t think but of some small gains you don’t consider your trading as a business, because if the gains could really be larger than what you obtained it means that you cut your incomes in your business and your costs, which are the losses, inevitable losses in trading, could end up not being covered by the gains and in that case you end up with a losing balance sheet at the end of the year or period whatever.
So it’s very important to have a plan, when you plan your trading you obviously do so looking at a scenario where you think you could end up winning on the long run, for sure you will not cut your gains at an early stage, because this would be crazy.
The right sentence could be “Sell, lose and regret!” because this would mean that you apply proper stop loss, planned stop loss, you might regret, it doesn’t matter!
You might regret, means that after having been stopped out you see that the market turns again in your favor when you were in position and obviously you regret because you say: “If I had waited…look, I would have been in gain”, but if you regret it doesn’t mean that next time you will change your approach.
It simply means that you were disciplined applying a stop loss where you suppose it to be and then if it was a wrong place because the market decided differently that’s not your failure, it’s just because things happen.
So another thing is that sometimes, when you have an open position which is showing losses and in the end it turns out to break even and to a very small gain, you close the position with a sort of relief, you’re so relaxed that really you think: “Oh, in the end, I did it, I did not lose the money!” and this is, this derives from “Sell, gain and regret” sentence as well, this is very dangerous because when you do so, that sense of relief that you have at the end of that trade looks like a message to your ego that you were right waiting.
If you had stopped out the position you would have cashed a loss while having waited and hoped you got into the black with some profits may be small or at least a break even but you had no economic damage to your portfolio and with this message to yourself you feel authorized next time to wait again hoping, which is wrong, your position goes into positive territory.
So nothing worse than this, always have a plan, where to exit, especially in the worst case when things go wrong and also in managing the winning position.
If you have a plan and you stick to a plan you are on the right track, if your plans are always wrong then you have to change something but this is another story.
The important is plan your trade, don’t hope, don’t close early profit just because you want to take the money and run, this is something that is similar to the Italian sentence and always stay tuned and committed to becoming a better trader.
This is it from Andrea Unger hey hello this time, see you next time ciao from Andrea Unger.