I just want to say that what the poster did I was guilty of myself 10 months ago.
I read a few books (mostly on fundamental analysis... go figure) and a little on TA and boom - thought I knew how to fade momentum stocks.
Well... all was fine here and there for a few months. Did not make too much money, but didn't lose a lot.
One fine month I decided I was a lot better at trading than I really was. Went short on a little stock called ACOR... price went up... I shorted more... price went up... shorted more.
At this point, I was short (not going to disclose exact amount ) but lets say it was more than 150% of my account on 1 biotech stock on the basic principle that what goes up must come down + my interpretation of their clinical results. LOL.
Well, in the middle of a test my position had moved against me several thousand dollars. I sat in class watching the laptop, finished the test, and made the final decision: I would take my loss and learn from my mistake.
I had a mentor who repeatedly told me not to fade these rallies... but I didn't listen of course (my personality has always been to find what works by yourself).
That was the best money I have ever spent. I learned something about myself at the time - I wasn't ready to trade. I also learned the power of trend, which I use today. I buy the very same stocks I tried to short nearly a year ago.
After the incidient, I lost faith in myself for a while. For 2 months I did nothing but read. Then, I came back slowly and found myself being a little more and more consistent. After being consistent for a few months, I still felt that I wasn't being disciplined enough.
I went paper, again, and did nothing but study the market, jotting down observations regarding industries/indicies/their interactions with stocks. Once agian, I stepped up my study of the markets. Every book I read I take notes on, every time I see what could be a pattern I write it down, etc.
Once again, a few months later, my trading journal gets a page worth of writing every 1-2 days. I study the markets 4-5 hrs a day on average as well as being a student and having a job, and I finally am making enough money to pay rent - but nothing impressive.
All I can say is... its not easy and the only way most people will ever realize this is by failing. Failing was the BEST thing that happened to me.
I still find it strange how I didn't really get serious until I realized this was a serious business. I guess a huge loss was enough to challenge me. I am glad I continued though (and my mentor was very hard on me - but I deserved it and I thank him for it). The trading that I do now is rediculously plain and boring - as many have said. But I still find studying the markets the most interesting thing I have ever done.
I can't remember the exact adage right now... but in terms of money management - newbies attempt to maximize profit, pros minimize risk.
I read a few books (mostly on fundamental analysis... go figure) and a little on TA and boom - thought I knew how to fade momentum stocks.
Well... all was fine here and there for a few months. Did not make too much money, but didn't lose a lot.
One fine month I decided I was a lot better at trading than I really was. Went short on a little stock called ACOR... price went up... I shorted more... price went up... shorted more.
At this point, I was short (not going to disclose exact amount ) but lets say it was more than 150% of my account on 1 biotech stock on the basic principle that what goes up must come down + my interpretation of their clinical results. LOL.
Well, in the middle of a test my position had moved against me several thousand dollars. I sat in class watching the laptop, finished the test, and made the final decision: I would take my loss and learn from my mistake.
I had a mentor who repeatedly told me not to fade these rallies... but I didn't listen of course (my personality has always been to find what works by yourself).
That was the best money I have ever spent. I learned something about myself at the time - I wasn't ready to trade. I also learned the power of trend, which I use today. I buy the very same stocks I tried to short nearly a year ago.
After the incidient, I lost faith in myself for a while. For 2 months I did nothing but read. Then, I came back slowly and found myself being a little more and more consistent. After being consistent for a few months, I still felt that I wasn't being disciplined enough.
I went paper, again, and did nothing but study the market, jotting down observations regarding industries/indicies/their interactions with stocks. Once agian, I stepped up my study of the markets. Every book I read I take notes on, every time I see what could be a pattern I write it down, etc.
Once again, a few months later, my trading journal gets a page worth of writing every 1-2 days. I study the markets 4-5 hrs a day on average as well as being a student and having a job, and I finally am making enough money to pay rent - but nothing impressive.
All I can say is... its not easy and the only way most people will ever realize this is by failing. Failing was the BEST thing that happened to me.
I still find it strange how I didn't really get serious until I realized this was a serious business. I guess a huge loss was enough to challenge me. I am glad I continued though (and my mentor was very hard on me - but I deserved it and I thank him for it). The trading that I do now is rediculously plain and boring - as many have said. But I still find studying the markets the most interesting thing I have ever done.
I can't remember the exact adage right now... but in terms of money management - newbies attempt to maximize profit, pros minimize risk.
Nonetheless, I would think the average person should be able to begin recognizing swing points to draw your trend lines on after a few days. It's perfecting the technique that brings most people to their knees. 