RamtaJogi— Hacking Life for Money and Fame.

They say that one should learn from others experiences. But if you learn from their experience, how would you get your own?

All the books and material (I mean EACH and EVERYTHING) I read about trading had one tip in common: Cut your losses, quickly. When I read that, I was like, well, that’s simple. Cut your losses. Sounds easy. Sounds doable.

What they didn’t tell you is that it is HARD to cut your losses quickly if you don’t plan it actively. Once you are in a trade, your mind starts playing all kind of tricks and you stop thinking logically. You start thinking emotionally. Emotions have no place in trading. What’s the fix? It’s simple. You enter a trade with a STOP order which automatically executes if your losses reach certain percent e.g. 3 to 5%.

On 8th October, I had open positions in ABK, SFI, ROYL and CSK (now CSKE). I closed all of them (except ABK) and lost quite a bit of money. (Find the numbers at the bottom of this post.)

Why didn’t I close ABK? Out of all the open positions, I still ‘feel’ that ABK could bounce back. I have consulted ‘lighter’ on GOTS chat room and he also thought that ABK could bounce back. Option activity on ABK suggests that there is a chance that ABK will come back. I don’t know if my mind is again playing trick on me but I think I will hold ABK for a week more and see if it moves upwards. If you have any suggestions on ABK or if you think I should get out ABK, let me know by making a comment on this post.

Another thing I have realized is that I can not trade based on alerts off chat room. [Matty told me that some time back, wish I had listened to you.] Alerts in the chat room doesn’t have sufficient information for one to make a trade. To be very honest, when I was initially attracted to trading, I checked the GOTS chat room logs and I thought, wow, only if I can follow these guys, I can make money. And as I follow them, I will learn while I am making money. But things are so fast paced during trading that it’s impossible to trade based on the alerts.

To summarize, lessons I learned are:

1. Never EVER trade without a stop order in place.

2. You can not trade based on chat room alerts. You have to do your own due diligence.

Yeah, they are obvious but I think the lessons really settle in your head when failure hits you hard.

Yes, I would like to say thanks to Steve, Matty, JV and Lighter. They have been patient with my queries, very helpful and gave good, practical advice. You guys rock! [There is a strong sense of community among folks who hang out in GOTS chat room. This community was one of the key factor which encouraged me to enter the wonderful world of trading.]

Status as of end of Oct 10th:

Positions traded for Gain: None

Positions traded for Loss: CSKE (46$), ROYL (112$), SFI (368$)

Open Positions: ABK (LONG 250 @ 3.68$)