The New Sell and Sell Short: How to Take Profits, Cut Losses, and Benefit from Price Declines, Expanded Second Edition

THE DECISION TREE FOR SELLING

A serious professional in any field, has a decision-making tree. It is rarely written down, as the pro usually keeps it in his head. In fact, it is probably somewhere even deeper—in his bones.

A decision-making tree is a set of rules that helps you decide what to do or not to do in any given situation. Professionals develop their decision-making trees in the course of their training, education, and practice. The best of us continue to develop our decision-making trees as long as we live. As my late great friend Lou Taylor joked in his late 70s—“If I become half a percent smarter each year, I’ll be a genius by the time I die.”

Few of us write down our decision-making trees. We tend to develop them in bits and pieces that gradually merge into a coherent whole. I grin remembering how, as a greenhorn trader, I decided to write down my decision-making tree during a five-hour flight from New York to Los Angeles. A month later I was still scribbling on a table-sized sheet of paper, crisscrossed with arrows and splattered with whiteout.

The only professionals who always carry printed decision-making trees are airline pilots. They are given manuals that show how to troubleshoot any problem on the plane. If a pilot thinks he smells smoke in the cockpit, he does not just wrinkle his nose and say “Geez, smoke. I wonder what I should do....” Instead of scratching and thinking, he opens his manual to the Smoke page and, with his co-pilot, goes through clearly ...