It was a week of mixed emotions for myself. I took time off and began reflecting on my short 19 months trading journey so far. There are more wrongs than right things I had done. That explains my negative profit and loss. I had read more books passionately than during my school days. I had stayed up late into the night studying charts and reading trading books which I'd never see myself doing when I was still a student. Yes, I learnt alot and experienced alot. But alas, I still made the worst and most reminded mistakes during the last 2 weeks. Since I cut away my HG-Metal loss, Everything was going smoothly and I had been faithfully and consistently sticking to my trading system. Emotions were kept in check as I blogged down my thoughts and near miss. Then I began to see many of my picks became top movers. Confidence grew and I got invested in some counters and sat of paper profits. Then recently...
30th September: Alerted to take a look at Bio Treat. I saw the chart and thought yes, it stood a chance for a breakout. Hence I contra at 1.04 out of greed for a fast gain. During intra-day, it dropped to 1.01, fearing a reversal and breakout downwards, I cut at 1.01. Resulting in my first loss in 3 months. Mistake here was, I shouldn't have contra. Trading is not an easy game. Most people got it wrong than right. I admit. I was greedy for quick profits and hence contra'ed. Another mistake i commited was to make decision during intra-day. Fear got to me when I saw 1.01, and I immediately cut the position. By the closing bell, it closed at 1.03, I could have loss by a smaller margin had I kept my cool.
The worst mistake was to let fear interupt my trading system. Moments after I swallowed my contra loss at Bio-Treat. I immediately took profit at Keppel Land babies. I bought at 0.460 few weeks ago and then when I saw a high of 0.490, I just couldn't resist in taking that profit to offset my contra loss. How wrong I was. Trading Legends has always said, "Let your profit run, and cut your losses fast" I did the latter right but failed at letting my profit run. I'm sure all of us now know that the Keppel Land babies are now trading at 0.810. A massive 75% profits. This was indeed a very bad Friday for me.
6th Oct: The STI's heavist decline day in six month saw my position in SIMSCI badly hit. I had taken a long at 273.1 and had to cut loss at 270.7. I checked the history and thought the index would make a technical rebound. It did, but the rebound was never close to my long contract. Hence by 5pm, I did not want to subject myself to more risk by holding overnight and decided to cut it. No Technical Analysis nor Fundamental Analysis can prepare you for a bad day like this. Shit happens once in a while. Mistake I made here was holding on to hope that the index will rebound and I am able to get out on the cheap. What I could have done is to take the loss as soon as it hit my stop loss. I had no stop loss and allowed the index to sink southwards. Anyway, I shouldn't have traded on that day because all the indications of a bad day was there. Nikkei & Hang Seng tanked 300 points each and Dow Jones downed 120 odd points over night. Why am I betting on hope? Greed. The thought of doing a quickie got to me.
Such is the power of psychology in trading. In the above true cases, I had been beaten by hope, greed and fear. If I want to suceed in the business of trading, I must master that 3 emotions.
I truly believe that psychology in trading is as important as the trading system and money management. It will be the next book I'm going to lay my hands on.
