On Making Trading Mistakes And The Pressure To Perform

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• Short Selling
• TIM Lessons

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30 minutes into the market open today, I thought to myself “This has gotta be a joke, right?” The overall market was selling off, but my one short, BJRI, was breaking above yesterday afternoon’s highs on amazing volume of 10,000 shares. I covered my 300 shares at $15.90, a pathetic $150ish loss—exacerbated by my procrastinating due to my snobbery that I wasn’t going to be scared out of my position by a 10,000 share breakout at $15.80.

What can you learn from this trade?

TIM Lesson: Trade random stocks and you’re going to get random returns

I even wrote I shouldn’t be in this trade yesterday! Even if I had made money, the risk reward ratio wasn’t very great and even though yesterday’s afternoon price action was decidedly predictable/bearish, a new day brings new action, so unless the situation was perfect (stock up on some BS hype news, up waaaay more off its lows think 50-300%, fading volume/message board chatter, stop losses about to get taken out), which this one was definitely not (was not up enough, potential industry bottom, fickly day traders weren’t piled in, stop losses weren’t until $15, message board chatter consisted of one guy spamming my post around), this is not a worthwhile trade.

So why do I (and many others) make stupid trades like this? Pressure. Pressure to perform. This is what hurts/kills/hold so many traders back. Seemingly everyone in this industry gets graded monthly and even though my fund was tiny, I definitely feel more pressure to sugarcoat my monthly returns near the end of each month. Very sad but true. After all, nobody looks forward to telling their investors (or readers) that for all their hard work, theories and effort, they had a below average or worse, a negative month, or had any losing trades for that matter.

(Strangely enough I do look forward to it because of TIM’s dual goals, profits and education, education is waaaay more important. So, a case can actually be made for me that I subconsciously take on stupid trades in order to help further your education. Or maybe I’m just making excuses for a bad trade).

TIM Lesson: Be better than this industry, ignore the periodic grading BullShip like monthly and yearly returns and focus only on worthy investment opportunities, whether they come about daily, weekly, bi-monthly or even yearly.

I get emails asking how I’m not embarrassed detailing all my losing trades—c’mon you know me better than that. I’ve already aired all my dirty laundry on national TV—literally—so I don’t get embarrassed about anything, especially trading losses. People ask, where’s the magic, you couldn’t have turned blah blah thousand into blah blah million and make all these silly mistakes.

Guess what? I’ve been making these silly mistakes since I started and I bet many others who haven’t turned blah blah blah into blah blah blah do too. Guess what, the stock market is random! That is except for every now and then when variables align to give it some predictability, aka THE ONLY TIMES YOU SHOULD TRADE.

We have to get over ourselves and admit when we’re wrong—this is how we learn. It’s time we all fess up so that we can help each other for once, we need to stop being so isolated—trust me, if you ever write a book or star in a TV show, you’ll understand what I have come to understand, we all have similar experiences, but because money is involved, people are afraid to be brutally honest.

Don’t be afraid, we all make mistakes, post your biggest mistakes below, I don’t care if you use aliases, just post ‘em to help everyone see they’re not alone!

Now you can Twitter any questions/comments to TIMhelp and obviously you can follow TIM on twitter too!

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