WHY TRADERS DO NOT SELL OUT STOCKS AT HIGH LEVELS

In every bull market many traders have enormous profits, but fail to get out at the right time. They let stocks decline and sometimes wipe out 50 to 100 points' profit before selling out. There must bea reason for this. We have heard much talk of Wall Street psychology and some writers have saidthat the 1929 Wall Street panic was due to mob psychology. This is largely true, but mob psychology would not have caused the panic if previously mob psychology had not caused the big bull market when everybody bought, got over-optimistic and failed to get out with big profits. people do get hypnotized and do not realize what has happened or what is going to happen until it is too late, which is one of the reasons why they do not sell outstocks at high levels. If investors and traders would only learn to follow up their profits with a stoploss order, which would get them out with a good part of their profits when the decline starts, they would be much better off. What was the use of this man allowing U. S. Steel, which he had bought at the right time, to decline over 100 points and wipe out the biggest part of his profits? Of course, after Steel was down 20 points he did not believe that it would decline 80 or 90 points more; if he had, he would have sold out. Remember, it is not what you believe, think or hope that counts, but it is what the market does, therefore you must have some rule to protect your profits, once you havemade them. I know of no better automatic protection than the stop loss order.