FoundationsStock Alerts + Tools0:45Psychology

The Price You Paid Is Irrelevant

Your entry price is a fact about your history, not about the security, yet it dominates decisions it should have no part in.

0:45 · 6 scenes

This lesson is part of a Stock Alerts + Tools plan.

What the lesson covers

  1. 0:00The market has no idea what you paid, and no interest in it.
  2. 0:05The anchors people use. Your entry, the recent high, and any round number that happens to be nearby.
  3. 0:14Why the entry price is meaningless. It records when you happened to act. It says nothing about value now.
  4. 0:23The prior high anchor. A stock down from eighty is not cheap. It is a different company now.
  5. 0:32The mechanism. Ask the blank-slate question: would I open this position today, at this price?
  6. 0:40Judge the position as if you opened it this morning.
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Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
The Price You Paid Is Irrelevant — MAD Academy Training Video · MadStockAlerts