Morning, there are hints in your post and nodferatu's reply that...

Morning,


there are hints in your post and nodferatu's reply that point to one of the massive issues.


"after doing some reading of a few basic trading/investing books."

and, nodferatu "There are some good trading psychology books outs there....."



the heart of the issue - is the difference between 'trading' and 'investing' and for either - the assessment of one's personality - including tolerance for 'risk'.



Now - I will go out on a limb here and say that I would bet that you have not even defined what 'risk' means -- for yourself - or perhaps - even looked up the definitive meaning of the word.

These are absolutely basic things one needs to do - unless one wishes to be in the 90% plus area of traders who go broke - most in very quick time.

Here is some interesting reading - there is a lot of work on it available - just google and read.


http://www.tradeciety.com/24-statistics-why-most-traders-lose-money/


"

1. 80% of all day traders quit within the first two years. ¹
2. Among all day traders, nearly 40% day trade for only one month. Within three years, only 13% continue to day trade. After five years, only 7% remain. ^1"

Why --------- in the name of god, would anyone want to be a stock trader with statistics like that?


Now - imagine a pub that has poker machines where - instead of going and putting in a dollar at at time - that you put in say 100 bucks in one hit - and then came back in 4 weeks to see what the result was.

Lets say that they even paid double what other machines pay out.


Would they get business? Or, at least - would they get anywhere near the business that the current one's get?

Why not?

You can answer all of these - it's important to work things out oneself.


Now - for the average asx punter ---------- look at the difference between 3 types of people ----

a. DT or ST traders

b. 708 investors who put larger amounts down well before listing - up to say a year before a stock lists

c. Warren Buffet - who buys, with no intention to ever sell.


Now - can you imagine a. doing what either b. or c. do?

Why not?


I won't go any further with that lot - you should come up with some pretty good thinking if you ask 'yourself' the questions.


Now - on the OP -

"I researched, bought, and sat on stocks until I thought they were at fair value and then sold them."


What answer would one expect if one asked Warren Buffet a question of - "if you owned a stock that was fair value - would you sell it?"



Now - think of a young fruit orchard.

An investor - plants an orchard - lets say - they buy (invest) in small trees - and plant them. Then they tend them.

Fairly close to a stock owner really in some ways - they buy a stock - and, they monitor the progress --

now - for the first year ------------- does the orchadist - look at the progress of growth - or does he continually count the fruit?

Now, look at the mentality of most of our stock owners - they buy the stock - then - pretty much - they keep and eye on the business - but, mainly - they judge almost all matters by the price ----- (the fruit).

And, - they love the young growth stocks ------------ the young trees.

But, how is it possible for young trees to bear fruit in their first year?

It's not - what one needs to be watching - is not how much fruit - or the market price of fruit - but, one needs to be watching - how the orchadist is caring for the trees ---------- is he maintaining the fences that keep the possums out - which can devastate a lot of trees in one single night - is he keeping on top of pests with a proper maintanince program which is well designed and executed.
Does he have a good transport system set up for the first harvests. Does he have a sales plan for the fruit.


Now - if you saw an orchadist - ripping up the fruit trees after planting them for 6 months -because they didn't have any fruit ------------- what would you think of him?


Obvious.

But, that's what most investors do --------------- they set things like - stop losses - which automatically without any controls - just rip out entire orchards.

Or even without stop losses - investors see a storm over the ridge - and go and pull all the trees out - hoping they won't be destroyed by hail - or some other calamity --------------- sounds very stupid - but, that's exactly what people do.

Most people on the market ------- don't think about the actual benefits that come from when the trees bear fruit - they just hope that someone will come along and offer them a high price for the orchard - before it bears anything.

And, if the price of orchards goes down for a bit - because an orchard across the valley sold for less -because the owner died and it was badly kept because of ill health - then, they sell their own orchard in panic - because it looks like orchards aren't worth much.

And - they just jump from orchard to orchard to orchard. -

Who benefits?

The orchard real estate man - and, if they do happen to make a profit - the tax man.


Not us traders.

Pinto