You are not tracking michael_arold.
| Symbol | Sector | Return | Exposure | Trades | Last Trade | Status |
|---|---|---|---|---|---|---|
| BSC | Investment Services | 3.50% | n/a | 9 | 12-Mar-08 | Prior Holding |
21-Aug-07
Lessons learnt: psychological stops
Holding Rationale for BSC.
Last week, I learnt an interesting trading lesson: don't trade when you can't follow the market. Here is what happened: I was short in a couple of positions (BSC, CTX, CFC). Unfortunately, I had to go on a business trip on Thursday and Friday. My positions worked out perfectly on the first day, but on Friday morning, I checked the news before my meetings and just saw three words: "Fed rate cut". Since I didn't have much time, I put in "buy to close" orders before the open, because I expected a huge rally. The result of the day was that I got filled pretty much on the high of the day. The market trended down during the day, but still closed up. I turned out in the afternoon, that according to my trading rules, I shouldn't have closed my positions. This mistake basically has cost me 5% of my performance. (the risk reward ratio on the other hand wasn't that bad: without a rate cut, the market probably would have crashed. Japan was down 5% the night before).
Anyways: what did I learn?
1. Never predict how the market will react on news. Follow the price action.
2. If you can't concentrate on trading, don't trade at all (Van Tharp basically calls that "emotional stop")
The example shows again, that your success in trading depends most on your psychology.
Posted at 00:27 in Holding Rationales | Permalink | Top
Don’t fear the Ultr...
Today I read an online article by the well known Jim Cramer ...
RobertWeinstein
Financial Survivor ...
Lord knows I'm a fan of the likely survivors of the financia...
MichaelComeau
Driver Detective
Trivia driver detective are a lot of fun. Apart from this, t...
moardena
UTRM saga
I wanted to post this message I received from Brenda Dilling...
jeffmixer
Categories
Holding Tags
Other Stock Tags
Archives
0 Comments on "Lessons learnt: psychological ..."
You must be logged in to post a comment.
Top