Noob Trader's Lesson for Monday

T

TheAngryHermit

Okay, here's the lesson I learned today:

I was watching BIIB. It looked SO strong, I bought 500 shares. Set stop at .20 below. BIIB goes up and I raise my stop to break even. BIIB goes down JUST far enough to hit my stop and then fly back up. Argh. So, I keep watching. Spot another entry and repeat above process with the same results.
By this time I decided to just watch. While I'm watching I call the ol' lady who's shopping at wally world (surprise!). I tell her the above story of my stock trading eliteness. While recanting the story, BIIB starts skyrocketing. I'm screaming in the phone, "OMFG this f'ing thing is still f'ing climbing!!!" She yells, "BUY IT! HURRY UP, BUY IT!!!"

So I did. I knew better, but for some reason, I did. BIIB then began to fall like a stone. Obviously. $71 loss. LOL :D


Has anyone else done something similar? Come on, be honest.
 
Alright, I have a question for the veterans: If you were to have traded BIIB this morning, what whould have been your stop? 0.20? 0.30?

Was I right in raising my stop to break even (even though I was stopped out, instead of riding it out for a nice profit)?

Please criticise and ridicule me. Thx.
 
Quote from TheAngryHermit:

Okay, here's the lesson I learned today:

I was watching BIIB. It looked SO strong, I bought 500 shares. Set stop at .20 below. BIIB goes up and I raise my stop to break even. BIIB goes down JUST far enough to hit my stop and then fly back up. Argh. So, I keep watching. Spot another entry and repeat above process with the same results.
By this time I decided to just watch. While I'm watching I call the ol' lady who's shopping at wally world (surprise!). I tell her the above story of my stock trading eliteness. While recanting the story, BIIB starts skyrocketing. I'm screaming in the phone, "OMFG this f'ing thing is still f'ing climbing!!!" She yells, "BUY IT! HURRY UP, BUY IT!!!"

So I did. I knew better, but for some reason, I did. BIIB then began to fall like a stone. Obviously. $71 loss. LOL :D
Has anyone else done something similar? Come on, be honest.
More...

Ah yes, nothing like the good ole "Buy the Top" days. Anyone that says they've never done that is a liar, or hasn't been trading long.

First of all, don't take trading advice from the "old lady".

Second, once you get more experience/discipline, you'll learn mental stops. But, from the sounds of it, you're a long way from there so take the lumps and mark it up as a lesson in discipline.

Good Luck!
 
Sure -- I'll 'fess up for today (Tuesday 12/18)

I am keeping a journal under strategy trading entitled 'developing a profitable strategy'


but I'll 'fess up here just for grins

So the simple strategy is:
wait for a financial stock to hit a low -- then wait for an up day in the Dow --- buy the stock and ride it up a couple points

this has worked 3 times today

so before the open this morning --- I bought 100 shares of GS at 208

hmmmm..... what did I forget
1) Earnings day ------- whoopsie -- did not pay attention to this
2) Goddam GS was not actually at a new low - it was at 208 for christ sake!! (laughing)


So Im watching it sink like a stone all morning --- thinking --- ok so maybe I still have a bit to learn.... (ya think?)


now if I had followed my own damn rule and watched it till it hit 197 -------- welllll

so since its a rule breaking day for me --- Im not gonna bail on the trade
I've got a stop loss in at 185


and Im gonna stay with this one for a while


wierd maniacal laughter and ruthless excoriation from the crowd is most welcome


Rock On!
 
mgabriel01: it looks like GS is bouncing back. That's a heck of a loss you're willing to take with that stop loss. I keep mine at one or two dimes. You're talking dollars! :)

Thx for the replies.
 
Quote from TheAngryHermit:

Alright, I have a question for the veterans: If you were to have traded BIIB this morning, what whould have been your stop? 0.20? 0.30?

Was I right in raising my stop to break even (even though I was stopped out, instead of riding it out for a nice profit)?

Please criticise and ridicule me. Thx.
More...

Never a reason for criticism or ridicule IMO.

We never (ok, rarely ever) use hard stops. I've helped hundreds of traders over the years, and hard stops have never been encouraged. There are many reasonf for this, but rather than get into all of that, let me try to explain what we try to do.

I encourage alerts or "mental stops" because a trader should have a chance to evaluate the immediate "snapshot" of the overall market, sector, depth of book, round number pricing, Prem/discount to FV (of futures), TICK, etc. before taking the loss.

Some traders like to use stop-entry orders, but we rarely use stop loss orders.

FWIW,

Don
 
Im willing to take my lumps if Im wrong
But based on the recent volatility in GS I don't think Im sunk
I'm gonna play it on gut feel and see what happens

and be a little smarter about things next time


Quote from TheAngryHermit:

mgabriel01: it looks like GS is bouncing back. That's a heck of a loss you're willing to take with that stop loss. I keep mine at one or two dimes. You're talking dollars! :)

Thx for the replies.
More...
 
Quote from mgabriel01:

Im willing to take my lumps if Im wrong
But based on the recent volatility in GS I don't think Im sunk
I'm gonna play it on gut feel and see what happens

and be a little smarter about things next time
More...


One other note.
Part of the excercise (in my humble opinion) is to get a real-life-handle on my own tolerance for risk

This one doesnt bother me. I won't lose sleep tonight over it
So its a good benchmark for risk
 
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