A few weeks ago a this tale of how he turned $500 into $2,000 in a few weeks using my strategy.subscriber inspired a ton of poor folk with
Now a few weeks later, his account is closer to $3,000, but he’s been busy watching all of these video lessons and he’s just experienced a great lesson himself that he wants to share:
FAST LOSS CUTTING
Many traders brag all over twitter and other parts of the web about how much money they are making which made me very stretchy of them especially, the traders who doesn’t talk about their losses openly or at least post trades on.
Yes, I was able to turn $500 into over $3000 in a few months thanks to the variables explained in Penny Stocking, Pennystocking Deux dvd’s and a nice wakeup call from Investorslive by calling me “lazy” when I asked him a lazy question on twitter. I received yet, another wakeup call soon after I read about a trader nearly destroying his own trading account due to his own ego and ignoring his past education from Tim. (see details)
I became deeply concerned not only for myself but for other new traders on planning more aggressively when to take losses quickly. Since I was going to be short selling for the first time I didn’t waste any time and purchase the ShortSelling dvd and since I needed to become better at reading candlesticks, I purchased Steve Nison’s Japanese Candlestick Charting Techniques as well.
My first short sell trade after watching the dvd was with Glu Mobile Inc. (GLUU) was on Thursday, September 1, 2011 with Speed Trader (On Tim’s list of brokers) and I loss about $120 which could had been a lot worst if I allowed my ego to make the trade for me instead of sticking with my reasonable plan I mapped out the night before. I entered the trade short with 2500 shares around 10am because I seen in the past there was a morning spike and fade for 3 days straight. Once I was in the trade I was up $25 bucks but things begun to change quickly and the stock displayed signs of going up. I decided to trade safely by selling and reentering but I end up receiving a bad fill for only 1300 instead of 2500. I tried to sell the other half but end up buying more shares to short by mistake. I was able to get out all my trades with that cost me $120 and a loss of two day trades. I was very happy that I planned the night before and my main goal was to cut losses because later the stock went to $3.88 but faded as I expected.
Yes, this was a bad trade but it was still good planning the night before in my journal (only .99 cent guys). Also, understand that my account is under $25,000 and I’m limited to three trades in a 5 day business cycle therefore, I don’t just click and short sell anytime I want just because I have 3 day trades to use as if I’m vegas trading instead of trading with a plan.
I believe cutting losses quickly is very important when it comes to trading and a loss just means that you was wrong for that trade but allowing a loss to grow because of not cutting it quickly is a whole different problem. I think about it would you allow a spilled beverage to spread without cleaning it quickly after a spill?
Many people clown Tim for cutting losses so quickly or for not holding a stock longer but in trading ego, doesn’t make you a good trader it is what you do after you are right or wrong while in a trade. With small account like mines I can’t ever afford to grow an ego.
Posted in Trading Losses