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This is a great followup to the 94 trading lessons I posted the other day and all the trading lessons in my instructional DVDs.
I’m basically breakeven for the month right now, but I was up $6,000 earlier in the month so I’ve had some recent trading losses…the good news is that after earning $28,000+ (10%+ gain) in November, I’m up 135% in 2009, after earning 197% in 2008…below I saw THIS solid blog post by a guy who does similar trades to me, but is too cowardly to try to dethrone me as the #1 ranked trader out of 40,000+ on Covestor…hahah yeah Johhnny boy, chew on that (seriously just signup, I need competition, the lack thereof actually makes me look bad)
Anyway here’s the great post, pass it along and learn from it:
How I react to loss, different than most traders
Today 12/16, dropped about 25% of december profits in one day on a surprise news item on Helicos BioSciences Corp. (HLCS) (Could have been worse, sold half yesterday on odd action). Not good. I actually have been waiting to write this blog for a while, but it’s been a few months since I had a loss over 5k in one day, so I want to share it today.
In my opinion, anyone can post and handle gains really well. It’s how a trader handles loss which seperates the average trader from a great trader. An average trader would be crying right now about the loss. An average trader would be complaining about the loss. An average trader would be well, could of, should of, would of. Not me, I learn from loss. I don’t want to be an average trader. Today’s loss tells me one thing: I deserved a spanking.
When I start making big money as this month has started off, I press. I press with taking risk, such as shorting low floaters like GSI Technology, Inc. (GSIT), Somaxon Pharmaceuticals, Inc. (SOMX) & Sunesis Pharmaceuticals, Inc. (SNSS). I keep pressing with profits and risk, until I get smacked. Today’s lesson in loss in my loss is to pull back from risk at this point, which I will do starting tomorrow, and start protecting profits.
I have stated this several times, as long as the idea is solid, never sweat a loss. My idea of playing a speculative biotech was correct, as they have been flying lately, just chose the wrong one. I consider this a solid idea even though I lost.
My trading method is not about the day, but the SUM of the days in a month, or the SUM of trades. This is why when I have a gain, I don’t jump up and down, or when I have a loss, I take it in stride. I never said I was the perfect trader, but how I learned to handle losses like today have made me great.
I believe by learning this mindset with a real life example I did not want to provide can only help your trading.
Welsh
Posted in TIM Lessons, Trading Losses