How to control losses

Everyone knows how to win; but, few know how to lose! Yet the secret to making money in the market is knowing how to lose; or how to control your losses. Listen to the pros:

“I’m always thinking about losing money as opposed to making money. Don’t focus on making money; focus on protecting what you have.” – Paul Tudor Jones

“The majority of unskilled investors stubbornly hold onto their losses when the losses are small and reasonable. They could get out cheaply, but being emotionally involved and human, they keep waiting and hoping until their loss gets much bigger and costs them dearly.” – William O’Neil

“One investor’s two rules of investing:

1. Never Lose Money
2. Never forget rule No. 1” – Warren Buffett

Verily, most investors don’t want to be wrong and take a loss. They stubbornly seek perfection – a profit in every trade or investment. And, the neurotic pursuit of market perfection is the Achilles Heel of most investors. Perfection is impossible on Wall Street! As Martin Sosnoff said in his book “Silent Investor, Silent Loser,” “There is only perfection in the cemetery above Omaha Beach. There no crabgrass grows among the bright green blades cropped three inches above the earth. It is truly as Walt Whitman has said, ‘The hair of the Lord.’ And the crosses stretch out in that echelon of perfect longitude. The only perfection is in death.”