Monday, July 17, 2006

Wishful Thinking

Brett Steenbarger says that the worst fault a trader can have is arrogance - I say it is wishful thinking. The ability to believe something is true (or will come true) in the face of all evidence to the contrary does not make for a good trade.

If you are hoping that a stock will come back with a market rise you might be right but more often than not you will be wrong and you will lose even more money because of "wishful thinking". If you think something is bad it usually is and no amount of wishing will change the reality.

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