Share We Hold Our Losing Position Untill It Come Back?

I have received emails and comments from time to time from my readers, I reply every email as ASAP. here's one of them I want to share with you, with permission from the sender. Not in his real name.


Hi Fan Jun,


Recently I have come across your blog and I found some useful trading stuff in there, just want to say great work and well done! Enjoy reading your blog.

I myself is a newbee in stock market. Saved some money after 3 years working. Started stock in 2011 and made some bad trades and lost 10-15 % of my capital :( My recent worst buy in was yesterday evening before I can read your post this morning and now got trapped again. haih

I really feel that one must really study stock market at his best before he enter the market. If not, like you said, is all like gambling! At this moment, I just hope that tonight US market can turn out better and oil price don't shot higher so that I can sell them off at the least loss and get rid of this xxx./cross finger

I always hope I can have more holding power just to wait the price turn up high when it sinks, but it just that can't get over my fear, always get tempted to sell seeing it decline. Any advice from you Fan Jun? Is it good to hold until price comes back or sell to cut loss?

Rgds,

Vic

Below is my reply:

Hi Vic,
I agree with your point that one should do his/her due diligence before entering the market, stock market is not gambling. It's more of analysing the different market forces then decide yourself which side to stand.


Your question "Is it good to hold until price comes back or sell to cut loss?" is a great question. I used to think for those cheap stocks, I must cut loss quickly if lose money, never hold; but for "blue chips", if lose money still can hold and wait for it rebound. Now my opinion has changed slightly, I will cut loss quickly if when the stocks against me, no matter what stock it is. Some so call "blue chips" can lose your a lot too, e.g SGX, dropped from as high as 10.2 to 7.8 in four months time, SIA from 16 to 13, OCBC from 10.3 to 9.2 etc... you can name it. All stocks are bad unless they make you money.

I just can't stand to hold a losing position for long long time, and wish (out of nothing) it will come back one day. I want to control my own risk, not the company, not Mr. market, not anyone else. I want to cut loss fast so I can quickly move to other opportunities.