All of us are different.
Hence our risk tolerance and emotional stability would be different too.
A few years back, I saw a Youtube video on buying silver and one thing the video blogger said I liked very much.
He was answering the question how much silver should we buy:
Buy a 1 ounce silver coin he advised.
Can't sleep that night as you feel you need more?
Buy another 1 ounce silver coin the next day.
Repeat the process until you can sleep soundly at night. Ah...
I thought this makes a lot of common sense. No one size fits all magic formulas; but tailor-made to fit each and everyone of us.
It can apply to selling too.
For eg, if you feel you have owned too much equities in this current climate of doom and gloom, take some profits off the table.
Still can't sleep?
Sell some more equities until you are totally at peace when you sleep.
Mind you. This has nothing to do with whether you were right or wrong in your buying/selling decisions.
Nor is the execution due to fundamental reasons or technical indicators.
And it's definitely not dollar cost averaging, cutting losses, or averaging up or down money management techniques.
This is more about your psychological frame of mind.
If you have been investing or trading for some time, you may remember those nerve racking positions that caused you sleepless nights don't you?
Then you know what's it like to "lose our heads".
And it's not always about losses. Sitting on huge paper gains is just as stressful! No?
There must be someone coolly buying from me when I "capitulate" and sell at near market bottoms; and similarly, someone must be selling to me in glee near market tops when I buy with "irrational exuberance".
Do you perform better (drive, work, study) when you are well rested or when you had only a few hours of sleep?
Singapore Man of Leisure (welcome to my blog; just google it!)
