Some people seem to believe that the professional traders got that way by not being wrong. That they can somehow pick a stock that is going to shoot up 200% in the next couple of months. This is what leads a lot of people to just buy and hope for the best.
Well, if everyone just bought and hoped for the best there would be no professional traders. There would just be a lot of happy people when stocks go up and a lot of unhappy people when stocks go down.
Since when was putting all of your money on a 50/50 shot like that such a good idea? In reality everyone has their share of losses. No one can win every trade and many professionals don’t even win half of the time. The people who learn to accept this and work around it are the ones that end up prospering.
The reason that some people do much better than others is not necessarily because they have a better entrance strategy then others, but that they have a better exit strategy. If you hold onto losers hoping that they will turn around then you are only riding the stock further and further down, until eventually you will have to pull off a huge gain just to break even.
You do not have to be right all of the time. Instead it is better to know how to cut your losses short when you are wrong and let your winners ride when you are right. That is one of the most, if not the most, important thing to remember about the stock market.
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When I was young I wanted to learn how to trade the stock market. So I traveled around the country listening to professional traders talk about how they are making money in the market. Now I understand how easy it is to make money in the stock market and started a site http://www.stocks-simplified.com to help others learn.