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Trading Badly

8 August 2007 1,130 views 8 Comments

I’m in a funk. You ever get to that place where you want to reverse every one of your trade ideas? I’m there now.

I sell GRMN at $81 and it goes to $103. I buy BBBY for some reason at $36 and it goes low. Then I watch it bounce, set a stop loss that gets hit at $34.74, and watch it have a nice up day today. I sell EBAY in a whipsaw too, and now it’s jumping up like I thought it was going to two week ago.

I think the main mistake here is I’m being conservative, trying to avoid losses. GRMN looks like it’s dropping, sell… EBAY is dropping, sell. The other part of it is that I was nearly fully invested when the stocks started tumbling a couple weeks ago. So “reinforcing” my position was a trick out of my disposal. (That’s my own fault.) I aslo was pretty frustrated for getting in BBBY early and just wanted to get some distance from that trade.

So what do you guys do when you make big costly blunders like this?

I’m trying to have a little perspective. I made a big hit on GRMN, played it pretty well to the strategy I set up. Everyone long was losing money last couple weeks, so I was keeping pace, right? (sidenote: I wonder why I was so impressed by the relative strength of EBAY and GRMN when stocks were going down, but then didn’t back that up when stocks start to rebound a little. e.g. GRMN is down 2% when the market is down 3%. I kept thinking “I’m losing less money than everyone else.” But didn’t think to translate that into “When things turn around, these guys are going to soar.”)

I’m also trying to find a really great setup… something to get my confidence back. I’ve always wanted to own some GOOG for the long term since I think information is going to be the most important comodity out there in 10-15 years and GOOG is on top of it. It looks like GOOG might be at a good spot for investors late to that game to get involved.

EBAY broke through a major resistance level and is taking off. If I watch it closely, I might be able to get in close to trend. It’s moved a lot past couple days so it’s hard to pile on now (especially after selling it at just about the absolute bottom). But then some stocks don’t really pull back = GRMN.

Trading opportunities in SIRI and ESLR, stocks I like to watch. But I’m wondering if I’m on top of those enough to trade them well. Any other ideas out there. (Need to look back through some old comments where people made suggestions before.)

Thanks for listening. Have fun. And I hope others doing a bit better here.

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8 Comments »

  • Phil said:

    Fear not!!!

    You are not alone. The market is up far more than I predicted and my hedging is now costing me money.

    I just remind myself that you can’t win them all, nor is anyone able to accurately predict what the market is going to do.

    :)

    Cheers,

    Phil

    # 8 August 2007 at 10:52 am
  • Christian Gross said:

    Phil: How is your hedging costing you money? I am seriously curious?

    Jason:

    Why do you want to own GOOG? I mean who cares about GOOG! If you can’t afford their stock its their loss not yours! Remember that the market is like an ocean’s wave in that there will always be a tomorrow to make money.

    Next you are trading too many stocks Jason. I have found that I can trade one to two stocks well, but multiple not. This is actually a core reason why I am writing an algorithmic trading system.

    So focus on one or two stocks and learn to live, breath and eat them. I have a favorite set of stocks and I trade them constantly. When you learn the details of those stocks you can watch them twitch and get a feeling of what is going to happen.

    For example Grace Cheng who does FX trading I read once in a posting only trades one or two pairs. And before trading another pair she spends quite a bit of time learning the quirks.

    And if you don’t jog today, start to jog tomorrow. Or do whatever you would to exercise. I jog and walk my dogs to get clarity. Whenever I am stressed out or pent up I take a breather and exercise. It works like a charm. Some may say read, or relax, but I have found doing physical labor works much better. And you get healthy!

    # 9 August 2007 at 5:55 pm
  • Joe Fier said:

    That is the fun (or not so fun) of the game, ups and downs. I would just recommend to do you research of the company and fully believe that they will pull through the rough times that you’re seeing now. Possibly even watching these stocks on caps.fool.com is you have time for that. I’m sure any research and watching will prove beneficial for you.

    # 10 August 2007 at 11:52 am
  • Jason (author) said:

    Christian, thanks for the comment.

    I just re-read this post, and it does sound whinier than I intended.

    The truth is I’m actually very level headed about this. I’m not losing sleep or anything, just realizing that my trading hasn’t been effective through this time. I think I’m not alone.

    I want to own GOOG for the reasons I stated in the post. Same reasons since they’ve gone public, but for some reason I never took a position. (I think it had something to do with the hype and not wanting to deal with the swings that might accompany it)

    But in any case I think GOOG is going to be a prolific company and want some of that return. With their price down, now is a good time to jump in… not because the stock is “expensive”, but because I think there is more support right now and less chance to lose a bunch of money right away and get discouraged.

    I think you may be right about following too many stocks. I have about 10 right now on my watch list, and that is too many with how much time I have to give. It’s like I don’t have enough time to do the proper research, but I’m not happy being a hands off investor… not a good mix.

    I have been using the gym and/or pool often these past few weeks to shed stress… mostly over a lot of work I have piled up now, but watching my IRA tumble a bit is part of it for sure.

    I’m actually in a really good place mentally right now. I’m also very open about sharing these feeling I have, so it may seem like there is a bigger problem here.

    # 10 August 2007 at 2:01 pm
  • Phil said:

    Hey Christian

    I have hedged via SKF and SDS (double short the financial stocks and the S&P500, respectively).

    They moved back below the purchase price I paid in the big market retracement of last week, so when I say “costing me money” what I perhaps should have said was “unrealised capital loss”.

    :)

    Cheers,

    Phil

    # 13 August 2007 at 8:25 am
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