# 7 Deadly Sins Of Investing

In the investing world, [the] seven deadly sins apply. These "behaviors," just like in life, lead to poor investing outcomes. Therefore, to be a better investor, we must recognize these "moral transgressions" and learn how to overcome them.

Earlier this week a trailing-stop triggered on one of my investments, netting me 20%. At it’s peak, I could have netted 30%, but that’s the fundamental problem with investing; you never know the peak or the bottom until after the fact and that’s why greed and pride can be so powerful in the market and it is for that very reason that I use trailing stops to protect myself from myself.

See, when an investment is going good, the urge is to hold out for even more return potential. And when things are going sour, the urge is to hold the losing investment, hoping it will rebound and you won’t lose your money. That’s why you need to make two decisions before you buy an investment and then use those decisions to automate the buy/sell action:

In the graph below, the green “B” marker between Feb and May’13 is the point where I bought shares of CNQ. The red “S” marker at the end is where I sold all shares and exited the trade completely after the price fell 15% from it’s high of $46.51 in July. Could the 15% loss be the end of a correction? Sure. Could it be the beginning of a precipitious fall to$2? Sure. That’s why you predefine your goals and automate the actions.