Sunday, 3 June 2012

Buy/Sell Until You Can Sleep Soundly

All of us are different.

Hence our risk tolerance and emotional stability would be different too.

A few years back, I saw a Youtube video on buying silver and one thing the video blogger said I liked very much.

He was answering the question how much silver should we buy:

Buy a 1 ounce silver coin he advised.
Can't sleep that night as you feel you need more?

Buy another 1 ounce silver coin the next day.

Repeat the process until you can sleep soundly at night. Ah...

I thought this makes a lot of common sense. No one size fits all magic formulas; but tailor-made to fit each and everyone of us.

It can apply to selling too.

For eg, if you feel you have owned too much equities in this current climate of doom and gloom, take some profits off the table.

Still can't sleep?

Sell some more equities until you are totally at peace when you sleep.

Mind you. This has nothing to do with whether you were right or wrong in your buying/selling decisions. 

Nor is the execution due to fundamental reasons or technical indicators.

And it's definitely not dollar cost averaging, cutting losses, or averaging up or down money management techniques. 

This is more about your psychological frame of mind.

If you have been investing or trading for some time, you may remember those nerve racking positions that caused you sleepless nights don't you?

Then you know what's it like to "lose our heads".

And it's not always about losses. Sitting on huge paper gains is just as stressful! No?

There must be someone coolly buying from me when I "capitulate" and sell at near market bottoms; and similarly, someone must be selling to me in glee near market tops when I buy with "irrational exuberance". 

Do you perform better (drive, work, study) when you are well rested or when you had only a few hours of sleep?



  1. Sleep Indicator is still the best TA or FA indicator to be used by retail investors/traders using our own money.

    1. CW8888,

      Yup. No point in the day confident this, confirm that... But toss and turn the whole night.

      Mental health affected all the "potential" profits in the world so what?

    2. To me, the best way to sleep soundly at night is money for Stock investment is money for stock investment. Money for daily living is money for daily living. i like to keep things as "simple as possible" when comes to money.

    3. To a good night's sleep no matter what happens in the market Temperament!

  2. did you guys got any nightmare before, out of the blue supposingly to be a calm and peaceful night?

    1. Eat too much before sleeping may get nightmare

  3. Coconut,

    Can't recall I have. But I do recall after watching scary movie, go toilet also scared... LOL!

    Usually, if I wake up with no dreams, that meant I slept like a baby.

    If I can recall my dreams - nightmares or erotica - it means my sleep has been interrupted :(

    What was I thinking in the day!?

    1. Chinese saying:- "What you ponder in the day, you dream at night"
      In other words, No daily evil thoughts, no nightly horrendous dream. My take.

    2. i still can remember a dream i fall off a cliff (of bed), knn, i think i went to the BT hill that day looking for monkeys haha.

    3. ya smol, good post, say many times before, learn to scale in and out of your positions, thats risk control.

    4. in your terms, scale in and out of your "psychological frame of mind".

    5. Yes Coconut,

      I now very much into scaling in and out.

      My old 100% in and out is the height of arrogance!

      I now let the market tell me whether I am right or not.

      Plus cutting loss on my advance party is less painful too ;)

    6. Temperament,

      I have the same views on dreams.

      It frequently is our inner voice trying to tell us something.

    7. thats right, start small and don't be greedy. you may not make killings (in the begining) but you don't get kill instantly.

      most important you can cut losses like eating ice cream, and if you do lucky to build a big position, wait patiently for the killing.

    8. so those stupid singtel, smrt and sph are all gone. i now have a small net short position. will snow ball if market continue to go south.

      i will not long my portfolio until the market ran out of air! or until it turn forcefully.

  4. Hi SMOL

    Yes, after 2008/2009 crisis, I have learnt better portfolio management and to always have some cash to buffer against unrealised mark-to-market losses in equities portfolio. That helps me sleep much better knowing there is buffer even if paper losses are in 4-5 digit figures.

    Be well and prosper.

    1. Good for you Panzer!

      Experience is one of the best teacher; and the most painful...

      Perhaps that's why we remember them better!

      Sleep well.


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