Keeping a Cool Head in a Hot Market


  • Format: PDF
  • Pages: 35
  • Published Date: 2005


Learn how to keep a cool head in a hot market. When a hot market situation develops, you have an exceptional opportunity to make extraordinary profits, but also, an emotionally draining environment in which it is easy to make mistakes in judgment which can not only lose the opportunity to profit, but can also destroy your trading account. It is vitally important to keep your wits about you when you become involved in such a situation. Veteran trading coach Ruth Roosevelt shows you in her usual no-nonsense, right to the point style, how to maximize the benefits and avoid the landmines encountered in a hot market.

This book explores the dilemma faced by all traders. At the core of trading—indeed investing as well—lies a crucial enigma. A trader must protect his capital: he must not lose his medium of investment. At the same time he must take advantage of the opportunities that come his way, but in so doing, he puts his capital at risk. It’s a balancing act. The trader must continually measure risk with reward and keep the two in a state of counterpoise. Truly, if nothing is ventured, nothing is gained. If you clutch the bird in the hand, you will not catch the two in the bush. Too much hesitation in the face of movement, too much reluctance to enter a market, and the tide of fortune passes.

At the same time, rushing into a situation before it’s mature leads to false signals and false hopes. In rushing the bush, you could lose the bird in the hand. The trader’s conundrum is to preserve the money she has while growing it at a rate commensurate with what the markets are offering. Once the entry is commenced, the problem is just beginning. How long does she stay? How does she know when she’s wrong? How does she know when the move has ended? Grabbing small profits in a major move is a recipe for mediocrity at best and failure at worst. We’ve all heard the saying: “the money is made in the sitting.” And, indeed, great fortunes have been made staying with a position through its ups and downs. The Warren Buffet’s of this world have proven that.