Frame of Mind: Lose $50 and make $150.
Went long BAC .05 away from the top of the opening rally at $39.75. Almost got stopped out, but I held on. It rallied all the way back up to $40 where it met some resistance.
On the second try of $40 I got chopped a little bit trying to play the breakout, but that didn’t happen . The third time I tried again but it fell back down to$39.90 where I cut finally cut my losses. Oh yeah, that was the last pullback before the run-up! I’m really good at catching the tops and bottoms!
At this point I was down $62, frustrated, wanting to get back into my stopped account to short this sucker and I was ready to lose $100, violating what I had said to myself earlier that I will only lose $50.
Fortunately I got my bearings right again and didn’t short the sucker. The sucker rallied .50 more, following a nice ascending triangle.
When I got back to my account I traded the oils and jpm, made a little, lost a little, then stopped trading at lunchtime.
Had I kept my initial $39.75 position, I would have been up $50, just sitting and watching the stock move.
It’s not the number of trades, but the quality of the trades. Surprisingly I’m only down $42.
Whenever I have a hard time trading, I just have to use this thought process:
- If I can lose $50, I can as easily make $50 with a flip-a-coin approach.
- If I have a little bit of edge, I will come out ahead in the long run.
- If I subdivide the $50 into 5 risk $10 trades and hold it to the point of no return, I may lose $50 pretty quickly, but on breakouts I may bag $100 easily.