Food for Thought..

" assume that they are better than average at picking winners and assume that they are right 50% of the time. They run their losses until they have lost 50% of their capital and take their profits when they are up 10%. They have almost guaranteed themselves a loss of 20% over time!" he exclaimed. "Now assume we reverse these habits, cut out losses at 10% and run out profits until we have at least doubled our money. We don't need to be right more than 25% of the time to still generate a positive return of 17.5 over time. The important thing is that we have skewed the return distribution to the right by changing a bad habit."