What will happen next?
Whenever thing are going well for me I make a beeline for my trading journals. I am amazed at how easy it is to forget what happened even a few months ago. I was really surprised to see some really awful months in years that ended up going very well.
These last couple of months are in no way the worst months I've had. Not even close. During 2006 I lost 31.03% from the beginning of May to the end of January. I was much better then at staying the course and not letting the market's swings depress me. In fact just a few months before that gigantic drop, in February 2006, I lost 14.73%. Somehow I managed to end the year up over 60%, so I really don't know what I'm freaking out about.
Part of my problem is that I too often look at the money I've lost rather than the percent. I have a lot more money now than I did in 2005, so losses hurt much more.
As you can see from my returns, I haven't stuck to any of my plans and it has hurt me. I've got to get back on track and stop this silliness.
Only 3 stock qualified using MACD this week. I don't know if I should consider that bullish or bearish. Five stocks earned Zacks #1 rating. The highest relative strength stocks all got pretty beaten up last week.
Stick to the plan.
Thanks for everybody who wrote words of advice and encouragement recently. I'm amazed by the intelligent people that read this dumb blog. Please keep up the brilliant discussions!
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8 comments:
Have you thought about how you will prevent/minimize (ideally irrespective of mkt conditions) such big drops in your portfolio?
You mentioned that you would want to trade full time in the future. If you do not have proper loss management strategy then with mounting losses the stress level during full time trading will be tremendous especially if you have a family to support.
In a month you will have only 22 days of trading. Some of those days will be not favorable to being long (I am mostly long) as funds/people will be simply selling on those days. So the number of good days available to recoup losses are few. Moreover, a 50% loss means one has to make a 100% gain with a smaller capital just to breakeven. Full time trading needs lots of discipline, focus and mental calmness. It is not an easy job. I do it and am saying from experience.
Advice: Think about adding loss management strategy (stop loss, hedging) to your trading. Reinforce your system.
Ask yourself how much money you want to make in a DAY? Then
make WEEKLY (5 days of trading) plans to achieve that goal. i.e WEEKLY GAINS divided by 5.
Steven
One more advice/point: If one holds a small portfolio (and I am assuming that you do) it is not fair to benchmark performance with S&P, Nasdaq drops etc. Meaning, Nasdaq has dropped 17% YTD and you are down about that much. So you are on par with the Nasdaq drop and that can be *falsely* comforting.
Because as a small portfolio holder you have advantages: you can be nimble,move quickly from one stock to another, short stocks, have almost no restrictions like other funds do. That's why it is so *relatively* easy for you and me to outperform the indices.
Conclusion: So you should ideally rather be breakeven or have less loss than the index.
Steven
You don't have a dumb blog.
We are all born sort of dumb. Only way to undumb ;-) is by learning and helping other learn. Via learnings and effort some of us become "experts" in *some* areas.
Remaining dumb in financial matters is bad because then we are letting the wall street crooks rake in more in annual bonuses. Goldman Sachs CEO got I think 60m last Dec as bonus!
Steven
I do utilize a loss management strategy. Most of the time, I follow Van K. Tharp's rules for risking only 1% of my portfolio on each trade. I've been following that rule, but I've been taking trades that I don't normally and it has taken it's toll. That's why I'm down more than all of my stock screens even though they don't utilize stop losses at all.
My problem has been my constant tinkering with my "system" and my jumping in and out of the market at inopportune times. I'm not smart enough (yet) and don't have the time to time the market or to trade technically. My best bet is to stick with my system that I know works and forget the "noise" out there that tells me that I can't make money doing what I'm doing.
BTW, hundreds of free ebooks on trading can be found at this site.
http://avaxsphere.com/search?q=trading&commit=Go
You can find free ebooks on almost any topic there.
Steven
Steven,
Thanks for sharing so much information. When are you going to start your own blog or do you have something going already?
You are welcome.
I don't have a blog yet. All I hope is that the trading gods continue to be kind to me and I can continue being a full time trader (like the last 3 years) even on my deathbed. ;-)
Steven
P.S: Remember to build a portfolio that lets u sleep well.
Here are some other blogs that you may find useful.
http://www.intelligentspeculator.net/
http://blogs.barrons.com/techtraderdaily/
http://microcapspeculator.net/
http://researchinvesting.blogspot.com/
Good free sites:
http://www.streetinsider.com/Analyst+Comments
http://www.rttnews.com
Steven
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