As you can see from the verified trades I posted on Profitly, I lost just under $4,000 shorting a Stansberry-pumped stock, tripped up by too large a position on an illiquid stock that simply wasn’t a great trade to begin with.
(As bad as this trade was, it basically just wipes out a week’s worth of work as my accounts are still up just under 50% in 2010, see my last 70 trades and understand my winning percentage is over 80%)
Given that I made several video lessons HERE and HERE of what I was doing right and wrong along the way on my recent short of Texas Pacific Land Trust (TPL), PennyStocking Silver subscribers already know the most lessons about that trade, but for everyone else, here are a few basic lessons
(This is the beauty of my business being built around 4 newsletters and 10 instructional DVD packages; unlike hedge fund managers and traders aiming to make as much for themselves as possible, my trading performance takes a back seat to teach you guys aka I’d do much better if I didn’t have to write so many damn emails, blog posts, watchlists, etc., but then bad trades like this would go to waste, just as they have for far too long int he finance industry….now these truly dumb mistakes can serve a purposes: to help others learn to avoid making them aka eventually turning the polluted gutter that is finance into something far greater)
1. Don’t take large position on illiquid stocks, as if I didn’t learn that lesson on a $500,000+ loss a few years ago
2. Despite being a blatant pump by an unethical firm with an SEC history, it’s a sleepy stock and there simply was never enough downside…aka don’t trade based on philosophy and logic alone.
3. Cut losses quickly–I could’ve done better or worse with this rule.
4. Price action trumps fundamentals research every time.
5. Live to fight another day…when your worst trade of the year only wipes out roughly a week’s worth of earnings, you know you’re doing pretty well and the key is to focus on future opportunities, day by day by day, week in, week out. Subscribers of my 4 newsletters know I’m already shorting a far better pump and dump and as you’ll soon see, they don’t just have an SEC history, but also have been involved with fraud charges and weapons charges too!
Posted in Basics, Controlling Losses