Today I approached my trading different than I usually do. When I shorted BBND, I actually had a plan in place... unlike in the past where I just enter a position based on a TIMAlert or some basic technical analysis and a hunch. Yes, I know... noobious-boobious. And although it's been said a thousand times... let me say from recent experience, this type of trading is the surest way to failure.
You may get lucky a couple of times (I did), but you will lose eventually... and lose big. I have to learn to find these plays on my own... and I will. I know from the emails and comments I've received about my recent trading experiences, in addition to everything I've read and all the conversations I've had; all the adversity I'm experiencing right now... every single of one you has experienced the same trial and error as me and... it's all part of the process. Yng, Vento, TNK... thanks for support btw!
Back to the post... I can't emphasize these two words enough... PATIENCE and DISCIPLINE. Above everything else you absolutely must possess these two attributes. PnD is the best known secret, yet two of the hardest attributes to maintain and implement as a trader. The adrenaline rush, ego, greed, and stubbornness... they're all emotionally driven trading mentalities and do not belong in your trading toolbox... they are your enemy.
My BBND trade was insignificant in terms of monetary gain, but how I played this stock... I'm talking before I even shorted it... all the way through to covering my position... was a very positive experience. Because of my plan, I really felt more in control. It wasn't impulsive, it was calculated... liberating indeed.
In the end I had a chance to take $300, but got "greedy", instead I took a very small gain of $11.00. (Had a meeting and didn't want to leave an open trade on the table... AHH DISCIPLINE!! Sake for me!) In the end it was still a profitable trade...
I look forward to tomorrow (always), continuing to sculpt out my new found "planning". I'm still working out the details of what exactly I want to know before I enter a position and how to calculate that information, but even with what I've got now, my confidence is exponentially higher when I enter a position...
And regarding this sinking market... remember what Mr. Buffet thinks...
“Be brave when others are afraid, and afraid when others are brave.”
BottomFeederMillionaire (can someone tell me how to center this??? THANKS!)
3 comments:
Noob,
I can't help but recall from "Muddy's Interview" the importance of not trading with scared money. As a noob myself, this is something I am constantly thinking about. If there is no fear of losses, or more appropriately, being comfortable with the amount you risk on the play, I know I won't be scared out of a trade. Today, I was trading my sister's account and was trading with scared money. I ran out of a trade on AIG that I should have stayed in. What ended up being a $13 gain for her would ahave been about $350 had I not sold and bought in a few minutes later.
I mention it only because it might help new traders like us to manage "fear" and to some extent greed, because smaller dollars traded dampen the gains and the rush from big greedy gains. As for the rush, ego, stubborness, and inattention, I've got no answers! I'm still working on those...Ha! Good luck to all!
BCT... I hear ya.
Discipline, patience, discipline, patience...
Music to traders ears... regardless of what level of trader you are.
Good luck to you this week.
Nice work on BBND.
I hear you on the planning thing. My best trades have come about where I carefully thought about it before I entered, and I had a plan.
I also hear you on not blindly following anyone. I never subscribed to TimAlerts because I didn't want to be tempted to follow Tim, even though he makes good picks. I wanted to learn things on my own, which, in the long run, will make me a better trader.
Nice work on the BBND trade. Sometimes the best trades aren't necessarily the biggest profiting ones.
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