Home > Apprentice Trader Journals > Turning a bad day into a tremendously bad day.

Turning a bad day into a tremendously bad day.

Today was one of those days where though the market is choppy some stocks did have good moves. Western Digital (WDC) which is a stock I have been trading well finally broke out of its range to the upside and was up 6.62%. Although I have been trading it well the last few weeks, I chose to trade gold  in anticipation of it breaking 1120 and that potential upside. Mistake #1.

Gold had been up $16 dollars overnight and seemed to be poised to break the 1120 level, which had been resistance. I am salivating at the market open thinking I got dollars coming my way. I am looking at $AKS and $GG, both of which are poised to gap up from the open above levels I had wanted to get involved. My strategy was to wait for the pullback.

It gapped up in the morning and then sold off for 30 minutes, but did hold the gap. I got involved early, but got shaken out as it broke below the figure. It rallied after I got out and then preceded to chop around. It never trended like a $WDC or a $AKS and I did a couple range bound trades to get close to flat.

The blood started innocently enough. I threw out a short at the top of the range with a quick out if it broke above the range. I was in the money for a while, but then it came back and I was flat. Mistake#2. Not trading your plan. It’s a scalp take your 10c and know that it’s been choppy all day. Don’t hope for some follow through. I deviated from my plan and started salivating at the thought of it making the lows and filling the gap.

I took a small profit on one piece and probably should have taken a small profit on the other to be flat on the day. The blood starts gushing from here. It breaks above the 35c range and I hang on telling myself it might be a fake out and it will certainly go down. Mistake #3. Not trading your plan and getting out at the exit level.

It goes up more and I am just letting it run. Close to covering, but not wanting to get out just to watch it go my way. I let it run against me way too far. It was painful and my flat day went to a significant loss day.

Why was I hanging on? My logic was gold would sell off a bit since it didn’t cross the resistance at 1120. I got out of my position angry and took a break. It was a bad loss and it was stupid because I basically risked 30c to make 10c. There is nothing right about that logic unless your goal is to lose your money.

Anyways I should have just left for the day upset at my lack of discipline, but I came back hungry to make my money back. So what if it’s 3:45, I can get it back. I saw that after the rally of $GG that stopped me out, the stock was pausing and looked like it was ready fly to the upside, so I went long. That’s where bad became worse.

I was long near the top and saw a support level to manage my risk at only 3c and the upside at least 20c. It broke my support and like a fool I kept holding. It broke the next support level and I kept holding. It broke the next level, which by the way would have made me flat on my original short, and I kept holding.  I kept thinking there would be buying coming in since the pits had looked ready to break 1120. After the pits failed to break above resistance at 1120, they did sell off. My exact plan from before, yet now I was long. I was a sucker both on the way up and way down!

I defend none of my actions above as I let my emotions rule me. If I could do it again I would do it this way. First, get in a trending stock like $WDC or $AKS. If I did that I would have had one of my best days. The rest of the mistakes would not have existed. Lesson: find a stock that’s in play and not one that is chopping around.

If for some reason $GG is the only thing I could trade. My first mistake was not getting out of my short immediately when the channel broke. That right there would have pretty much saved me from every other mistake afterwards. Second one though was letting the short run so far that I took such a loss on it. Third, coming back unstable to trade and then putting a trade on that would double my loss for the day.

  1. February 19, 2010 at 4:56 am

    This article is very useful to me as I also worked as stock trader. Thanks for sharing

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