In Alexander Elder's Trading for a Living (a book I recommend to all wannabe traders), Elder compares destructive trading practices to an alcoholic's destructive drinking patterns. As long as you call yourself a loser, you can focus on avoiding losses.

"A trader has to admit he is a loser, just as a drunk has to admit that he is an alcoholic."

Elder himself repeats the above mantra every morning before trading. Much as I like the book, I have my doubts about the wisdom of this message. As many traders are crippled by fear and lack of confidence as they are by hubris. It's not a message I would drill into my psyche every morning. Still, when you cock up, you have to take stock.

I cocked up.

I'm talking about Elan. I shorted Elan a few weeks ago.

Within days, I was up almost $1,200. By Tuesday of this week, I was down almost $600 . . . a swing of $1,800, for God's sake . . . and within cents of being stopped out. That is pathetic. You should never allow a big winner to become a loser. I should have offloaded half the position when the stock was hovering around the $14 mark.

The fact that I expected the stock to continue trickling down to $13 is neither here nor there. The market doesn't give a damn what I expect, which is why I usually take partial profits. I'm usually rigid about this kind of thing.

I've been on a winning streak and can only surmise that complacency was at the root of that foolish decision.

What's even more annoying is that this has been, for the most part, a very well-worked out trade.

My initial entry was timed to perfection, almost immediately providing me with profits. I judiciously placed my stop just above the stock's 200-day moving average at $15.30 (on both Tuesday and Wednesday of this week, the stock got as far as $15.27 before retreating). Anyway, I'm still in this trade . . . just (by the time you read this, I may have been stopped out).

I've decided to move my stop up another 10 cents to $15.40.

That's something I rarely do, but a little breathing room is called for, given that Elan came within three cents of stopping me out. The alternative is to cut my losses now without risking the maximum loss ($750).

I'm still bearish, however, and would be looking to get short were I not short already (a textbook short would be to sell on a break of Tuesday's low). The stock is technically overbought and has not yet been able to close above its 200-day moving average. If it does that, I may change my outlook, but not until then.

On a brighter note, Apple saved my bacon this week and continues to act like a true champion. I sold half of my position last week as it approached its all-time high, electing to leave the remaining half run. And run it has, breaking above its old high ($86.40) before heading onto $90. Apple may have been helped by the fact that Americans were celebrating Thanksgiving this week, with the accompanying media hype about how iPods were hopping off the shelves doing nothing to diminish bullish optimism. If so, it's conceivable that there will be a few quid taken off the table next week. Cautious technicians will note that the stock is overbought. Overbought stocks can remain overbought, however. Remember too that Apple is now facing no price resistance whatsoever. I wouldn't buy Apple at this juncture, but only a cynic would bet against a stock setting new highs.

Talking of cynics, I notice that I am building a fan-base out there in traderland. I occasionally peruse the Yahoo message boards when in need of some light relief after a tough day in the trading trenches.

On one such excursion last week I noted some of the more enthusiastic members of the typing classes discussing my worsening Elan position. I confess that this humble trader is taken aback by the attention. As a rule I don't reply to comments on my trading. Generally, this writing lark is a one way street. I write something, you may choose to read it . . . end of relationship.

However, there is an important point here . . . the more you talk about a stock the more you entrench your own emotional involvement in the stock. Those whose decisions are motivated by emotion and ego will lose, their money transferred to the rational players unencumbered by personal involvement.

That's how it works. And yes I am aware of the irony of a trading columnist recommending that you don't talk about your trading. However, that's my problem and the advice to losing traders stands.

Give up the message boards. Read Elder and as much trading literature as possible. Develop a methodology. Be prepared to change your mind.

To paraphrase Eli Wallach in one of my favourite Westerns. "When you gotta trade; don't talk, trade."