I always want to remind myself, "If i want to be a long term business investor, i should not do some short term trading to make quick profit!".
Why?
The principle and philosophy of a long term business investor and short term trading are very different. Long term business investor always sees investing in stock as purchasing some part of a company to be a shareholder of it. So investor will hold on to his/her investment for a long period of time, ride through the many business development cycles with the company - either up or down, until the business matures. In other words, it will not bother the investor much if the share price is down so much as long as the fundamental of the company remains intact. When the business matures, investor will keep the business so that it will generate a handsome return in a form of dividend paid yearly. Alternatively, after a detailed study on another company/business and the investor thinks this business is much undervalued than the current business he/she is owning now, the investor will consider to sell off partially or all of his/her shares to purchase another business.
Short term trader tends to make quick profit and monetizes it asap. Normally a trader will be willing to sell his/her shares as fast as it turns profitable, trader set an up limit, e.g. 20% up from the purchase price then he/she will sell off the shares. On the other side, if the price of the shares drops and continues dropping, the trader will also set a down limit, e.g. 10% down from the purchase price then he/she will cut loss and sell all his/her shares.
I am not sure if above principles are applied to other people, but for me, it does not work to be two personalities in investing. I will always prefer to be a long term investor. Being one type of personality, it enables me to to manage my portfolio much easier and allows me to have much more time to do a detailed analysis on the companies (either my current holding or new target companies).
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