|  DEC 1987

The danger in profits by Van K. Tharp, Ph.D.

The danger in profits by Van K. Tharp, Ph.D. Have you ever wondered why you can paper trade successfully, but fail miserably when real money is at stake? The reason is simple. The trader who concentrates on profits will have difficulty winning, as will the investor who concentrates on losses. Frank, for example, wants to make a killing in a speculative stock. He pays $5,000 for the stock. It immediately goes to $5,900, so he sells it. His profit of about $800 after commissions is a nice return for a few days work. A week later the stock is worth $6,500 and within six weeks it doubles. Frank can neither congratulate himself on his nice profit nor get back into the stock. He prefers to berate himself for getting out so soon. He also is afraid to get back into the market because it is now ""too high."" Does this scenario seem familiar?

by Van K. Tharp, Ph.D.