Well, guess what, another RED day (loss of ~60$) for me! 
It’s entirely my fault. I had two good winning trades, one in HIG (up by 315$) and one in DRYS (100$). Instead of leaving these two tickers on their own, I decided to play them again and lost money. Not only that, I played COCO based on chatroom alert without really doing any due diligence. Tried to take short position in FAZ but it moved extremely fast against me and I lost almost a dollar per share. And well, lost some chump change on ARNA trade.
If I look at last 3 days, I entered some trades randomly just because I knew I can close the position if needed. This is definitely because I am high on the freedom of PDT. If I would have been under PDT, I wouldn’t have traded COCO today and ANX yesterday. I think I need to calm down and make sure that excitement doesn’t get in my head. After doing an excellent trade with HIG today, I thought of myself as invincible and started trading recklessly.
From the excellent site ‘The Big Picture’, this quote suits to my situation perfectly:
“It is the markets’ job to reallocate money from the ignorant to the intelligent, from the lazy to the hard working and studious; from the naive to the educated, and from the speculator gambler to the investor.”
Today, I acted naive and gambler and the Market took my money away.
What next? I have few thoughts:
1. As a punishment of my naive trading, I am going to allow myself only 2 trades per day before I start trading well. if I break this rule, no trading for a day for me. If you read this blog, remind me in case I break this rule.
2. I won’t trade a stock for which 1) I haven’t studied the chart 2) I don’t know the support/resistance on top of my head.
3. Put at least 5 watches every night for the next trading day. Even though I won’t trade all of them, make sure I study their chart the next day and see if they behaved like I thought they would.
Let me know if you have any other thoughts.
RJ
Status as of end of Feb 12th:
Positions closed for Gain: HIG (135$), RF (17$)
Positions closed for Loss: ARNA (-8$), COCO (-60$), FAZ (-73$), DRYS (-60$), BAC (-10$),
Open Positions: None
3 responses so far ↓
1 pavtrader // Feb 12, 2009 at 7:11 pm
RJ, I had the same problem in the very beginning. I am not sure I am out of the woods yet but things seem to be stabilizing a bit. I would have a good trade, get excited and promptly give it all back and more. After scaling things down quite a bit in term of the share size and number of trades things seem to be going much more smoothly.
Gluck
2 sJ // Feb 12, 2009 at 8:58 pm
RJ,
Trading is an art in itself and needs alot of discipline and patience. Everytime you break your rules, the market bites you hard…i have learnt this with experience.
Also ARNA is a stock that has run up like crazy. One of these days it will fall hard. COCO was up on good earnings, but eventually early longs took profits.
Spend time reading/learning charts to make better risk/reward trades.
Good luck with it. Nice blog
-sJ
3 RJ // Feb 13, 2009 at 8:42 am
Pavtrader,
Scaling down share size will be a good idea. I think I will implement that as well.
And SJ, thank you for stopping by. Yes, trading needs discipline and patience. I think I have lot of patience, I only need to work on my discipline. Will definitely get there. And yes, your site is great, lots of useful material! You have found a new reader.
Thanks,
RJ
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