Refusing To Sell Losing Stocks
Refusing to sell losing stocks is a sure fire way to get beat up by the stock market.
Too many investors simply refuse to accept the fact that their stocks are losers. They feel that at some point in time their stocks will always go back up in price.
The problem with this of course is that they may never return to their original prices. Therefore, investors have money tied up in stocks that aren't earning them anything.
One of the simplest ways to prevent this common mistake is to have a stop-loss order in place right after you purchase a stock. A common stop order for any stock is 10 percent below the purchase price. Using this simple stop order tactic will take your emotions out of the equation.