No need to go into great detail about my HSNI flop... let's put it this way I lost more on this play then I did on my COIN play. The only difference is that I had $1,200 sitting on my screen with HSNI, when it was sitting at 5.63 and I was over my $8k (self-proclaimed) resistance by a couple hundred dollars... but I got greedy and actually thought I knew what I was doing because my account was up 60% in 3 months.
After all is said and done, I'm fortunate I was able to cover at $6.80 yesterday, before HSNI took off AGAIN! In fact as I'm writing this, HSNI is above $8! All-in-all, I lost ~ $2,700 (my account is back to $5,100), my trading confidence is somewhat flattened, and I'm once again humbled by my lack of discipline and over-inflated ego, as a trader.
I feel like the 14 year old kid who snuck out of the house on Friday night, took mom's car (without a drivers license) so he could go to a Halloween party... only to end up in a massive car accidnet... which could have been avoided if he had more self-discipline and wasn't so concerned about being "cool" aka over-inflated ego.
Like I posted yesterday, my trading style is very immature, as evidence of my Covestor chart. Although I've managed to make money, I'm not sticking to my trading constitution... which brings me to this... to anyone and everyone newer than me reading this, you absolutely must follow these rules of engagement, my trading constitution...
ENFORCE SELF DISCIPLINE - If you are going to achieve any success, this is paramount. No excuses, no exceptions!
BE PATIENT - Let the process go through it's process... don't rush it, don't force, trust it.
CUT LOSSES QUICKLY (3-5%) - The #1 indicator as to whether you're a disciplined trader or not. Do this without thought; this should be automatic.
I write this (again) as a friendly reminder of how important it is to follow these three rules. If you don't, you will have the extreme ups and downs, like what I've experienced, and ultimately not get any enjoyment out of something that is supposed to be exciting, rewarding, and fun!
One last thing before I sign off... my trading education is accelerated every time I lose. The idea that losing is bad, is wrong. You will lose, everyone does. Sometimes you lose big (relative to your account size). But as long as you're learning from your losses and not repeating the same mistakes over and over in the end you come out wiser and more grounded as a trader and in some cases as a person. Don't beat yourself up, tuition is high. And remember...
Experience is a tough teacher because she gives you the test before you get the lesson.
BottomFeederMillionaire (can someone tell me how to center this??? THANKS!)
9 comments:
Great post Noob! I been in the same situation the past 2 weeks. Getting my heart(account) broken $500 at a time.
But in retrospect it really does make you take a closer look at your strategy. Thanks for blog and we'll get our account off life support soon!
Noob- I also think you would benefit by not risking more than $3000 per trade. Now that you're down, maybe only 2500. That way one trade cannot make or break you. Combine that with 5% max stop loss, and you will be fine. Here's the deal- you are good and picking stocks to short. But your risk management is non-existent. Once you combine your skill at picking entries with proper risk management, you'll be a good to great trader. The downside with the more conservative approach is that your gains will be slower,but you at least always protect your capital. You will likely see slow and steady gains.
Anon - thanks for the comment. Please explain to one thing for me... (and pardon my ignorance)
What exactly is "risk-management"... in your words?
That's a bummer. I just started reading your blog, and am also a new TIM alerts subscriber. I saw his email about this stock and remember you shorted it as well.
Unfortunatly, I'm kinda thick headed and this lesson (as a new trader - 3 weeks now) I may only be able to learn by doing it myself - unless I can glean something from your candor here. Right now I am 4% down in the red. Would be more like 10% if my commissions were not free this momth.
On the other hand, if I had held onto my original stock purchase and sold it at it's high over the last three weeks, I would be 12% in the green. Tuition is not cheap here.
Charlie G.
Noob,
Let me tell you, sometimes it's rough even when you try to follow the rules. I may take a big loss on my overnight MSC short...perfect chart, perfect entry, closed red at $3.86, or so I thought...then there was a print right after the closed that put the closing price at $4.45...putting me 10% down on my position already! I'm hoping it opens back near $4 tomorrow, but I may be taking a big hit on this one
Noob! Hang in there, buddy, keep your head up...
Noob,
Sorry to hear about your loss. I am just glad that after such a big loss, you have not shaken out and still trying to analyze and still willing to give it another go. I think this spirit will definitely make you successful in future.
Good luck!
RJ.
Noob, I think that for you, risk management should be a combination of 2 things:
1) 5% stop loss (no exceptions)
2) risking only half your account per trade
If you haven't already, you might want to look into the concept of position-sizing, or money management. Van Tharp's classic book Trade Your Way to Financial Freedom is quite a good read.
Online various traders have written about it too:
http://tradermike.net/2005/07/position_sizing/
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