Penny Draedful stocks and the HC forums for me are have been a great insight into the psychology behind trading/investing.
You see the same mistakes repeated over and over again especially in the penny dreadful range. Simply because taking losses is one of the hardest for most people. Because of the need to be right, or refusing to admit they’re wrong, but many people refuse to sell for a loss.
Hence they then make a bad situation even worse by averaging down.
If there were ever two golden rule that everyone should learn before trading a single stock it's these ones.
- Learn to take a small loss early.
- Never average down.
“A loss never bothers me after I take it. I forget it overnight. But being wrong, not taking the loss, that is what does the damage to the pocketbook and to the soul.”
