What caused you to do that? I did something similar although I was out sooner because my positions were starting to trend down.
The concept of house money, selling half when the price doubles and letting it ride..
- Thread starter HolyGrailSeeker
- Start date
I live in Singapore and started hearing about covid in late December. Like most, I paid little attention through January, when the virus started spreading, putting people in hospitals and killing them. By late February there were talks of confinement and shutting down Asian factories.
At the same time, I was communicating with friends in the US who seemed pretty oblivious to the whole thing. The market was holding, covid was a Chinese thing and only 3-4 countries in the Middle East and Europe seemed affected.
It's that disconnect and seeing the market stall that Thursday and Friday in early March that sent me in a frenzy over the weekend. My wife thought I had lost it! I called my 401k account mgr first thing Monday morning and told him to put my entire account to cash... he also thought I had lost it and tried to discourage me from acting precipitously...
When about 40 days later I was hearing that Taiwan was spared, Korea had a plan to restart its factories and China had a decisive war time response to the pandemic I figured the market would see that as signs of recovery and reinvested everything in 100% stocks. My 401k returned 98% in 2020.
Ahh! Life unfolding as it should.
I didn't only saw what the charts showed and sold off positions as they turned down. Never started to get back in until they showed an uptrend. Didn't do anywhere close to your performance. I wasn't expecting a "V" recovery. Waiting for confirmation was costly.
I attribute my getting back in so soon to my utter lack of trading experience. Today I would most likely have waited for signs of a recovery and missed out on 10-20%...
It's one of the reasons I question why people don't get out in a downturn. Even if you get back in a couple bucks lower you'll still be ahead of holding all the way down and waiting for a recovery.
I don't always time my buys well and end up several dollars above the actual bottom. At that point I should probably take the loss and buy again on the upswing or buy another stock, but psychologically it's difficult to write it off. Holding it somehow feels like it's not lost. Sometimes it proves correct when the stock rebound a day or week later, sometimes not.
Of course, the longer I hold a loss, the greater the pressure (and stress) to write it off (opportunity cost). But every day the stock doesn't rebound is an opportunity for it to do so the next day, followed by disappointment when it doesn't. More than once I have taken the loss after weeks only to see the stock shoot up a day or two later.
the latest is BABA that went up $10 today.. 
I laugh at myself but I'm learning, incrementally.
Taking losses is hard. It gets easier the more you do it. I quit looking at individual positions and just look at the portfolio value.I don't always time my buys well and end up several dollars above the actual bottom. At that point I should probably take the loss and buy again on the upswing or buy another stock, but psychologically it's difficult to write it off. Holding it somehow feels like it's not lost. Sometimes it proves correct when the stock rebound a day or week later, sometimes not.
Of course, the longer I hold a loss, the greater the pressure (and stress) to write it off (opportunity cost). But every day the stock doesn't rebound is an opportunity for it to do so the next day, followed by disappointment when it doesn't. More than once I have taken the loss after weeks only to see the stock shoot up a day or two later.
I laugh at myself but I'm learning, incrementally.
The other thing I find is that once I sell a position I'm not quite as attached to it. I remind myself that there are hundreds of stocks I don't own that are going up without me. I shouldn't be that concerned about the one I just sold.
Having just begun trading in 2020, this year has been pretty hard for me, harder than it should have been. I should squeeze a profit if the remaining weeks of the year uptrend, but it shouldn't have come to that.
At least I learned a lot, enough to know there's more to learn. Stop losses is one lesson. Focusing on 3 to 5 stocks is another. Not feel obligated to trade is another.
I have found that preserving capital is the most important. You can't win if you don't bet but you can't bet if you don't have any money.
To me the art of trading is the fine balance of trying to shoot for enormous returns vs playing as safe as possible. If you play as safe as possible, you don't make much but you won't lose either. On the other hand using high leverage with volatile stocks gives you enormous returns but could backfire if things go wrong. Somewhere in between is the Holy Grail of trading.