I see no topics suggested so far. I have one, based on a comment I saw from a regular poster here recently (although not the first time I've seen the term used):
What is the justification for a "conviction" trade?
Conviction trade being a position held in a stock presumably based on fundamentals (great potential, new tech, growth sector, etc, etc). Price goes up and its all good, but then it peaks and starts to pull back, and drops further, and it just doesn't bounce. When to sell or how long and how deep to hang on if you believe the company is the goods?
My 2c worth, based on losses of way more than 2c worth, is a "conviction" trade is never justified.
Conviction trades, from my observation and also my own experience, typically are not called that before entered, only once the peak has passed and the price is pulling back, and you know you probably should have sold (at least some). Its a term used to convince oneself its ok to suddenly ignore the original trade plan or stoploss rule.
Why not sell and watch price action to re-enter at a better price, or when price action confirms a turn-around in the trend?
Just a thought I'd like to hear some views on, because for me it gets to the core of our trading psyche because it tests us when we are faced with that stay or sell decision, which many struggle with.
