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Taming the Lion: 100 Secret Strategies for Investing by Richard Farleigh

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3. Risk

3.0 Manage and embrace risk

Learning to deal with risk and losses

I had been trading for a number of years before I learnt how to deal with risk. By solidly identifying some market opportunities I had achieved good results, but I treated finance as a game of chess, an exact discipline, where I expected to benefit from good decisions and suffer from poor ones.

This overambitious approach occasionally caused some bad habits. For instance, when I was not performing well, I made three basic mistakes:

  1. I let losing positions drag on for longer than I should, as I hoped that eventually, I would be proved right.
  2. I was a bit harsh on myself, and I assumed that to make a loss, I must have missed something obvious.
  3. I let it depress ...

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