Monday, October 15, 2007

A psychological war

In my last post I mentioned I was going to sell my holdings for NTWK since I received a sell signal from the system. I sold it for 3.15 which is exactly 10% below my entry price. If any of you followed the stock you probably saw it closed on 3.79 which is 21.47%.


Now comes the big war between the mind and my instincts:

The mind tells me I should sell since I received a sell signal from the system. I have tested the system hundreds of times and I'm positive it works best as it is. Having said that and to be on the safe side, I run a few tests over the weekend trying to increase the value of the stop loss from 10% to 15%. The results were conclusive and proved that setting the stop loss to 10% yield more profit and reduce the drawdown.

My instincts on the other hand, told me last Friday's drop was just a normal adjustments fueled by the general market behavior for the same day. I have searched the interment and could not find any news to support the decline.

I try to educated myself and learn to trust my system. To be honest, it is very hard once you start to trade with real money. I believe that eventually I will be able to control the "what if ..." questions flooding me every time I encounter a similar situation.

Let me know what you do to overcome this dilemma.

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