A pause by the bears saw me took my humble losses on my 3 losing positions. I was dead wrong abt the direction and the last thing i want to do is to hold and hope. Now that i have raised cash from the sales, i'm all ready to look at the next opportunity. My wife asked me, "why is it that you can get it wrong?" To her, i can only smile and explained that losses are part and parcel of this game. I do not focus on the money lost from the stop loss, rather, it is important to focus on the next opportunity. I have been in this business long enough to know that, money can be made and losses if any best to keep it small. Hence it is important to be forward looking and get ready for the next trade setup. My friend new to trading asked, "Is it really so easy to just cut loss?" Of course not, the pain is still there when i cut, but i choose to ignore the pain. This is why psychology in trading is important. However i also know that in trading i cannot focus too much on the money prefering to concentrate on the movement of the market. This is because, i notice the moment i focus on the profits and losses, my emotions will run high and my intelligence gets lower and that's where i make all the stupid mistakes. Another important factor, it is easier to cut loss when i am risking profits made during the good years. This is where my edge is. Market can swing me in and out, but with my stringent money management i'm not hurting my capital, when i get into a good trend, that is going to double my money. As my ang mo shifu Livermore said, "There are times to go long, a time to go short, there is also a time to stand aside"
Back to why i had to cut loss, could i have hold and hope? After my painful lessons in the stock market, i never felt comfortable the moment the stocks go against me. With 3 stocks against me, i could feel the emotional baggage and i was affected psychologically to open another trade. Looking at the charts, they gave me no reasons to hold and hope. I clearly see that the play was in off-shore oil-play, properties were as dead as stone, banks were whacked, S-shares seemed to be sold down at resistance. I should be participating in these plays and not holding my losing positions and hoping. Trading is a dangerous game if you allow the stock market to control you. We must take control. Current rebound in the market to me seems to suggest a temporary pause. There seems little incentive for the market to head higher and with summer holidays coming up, we may drift sideways. Euro championship is coming up, market may stay quiet. This is where volume will fall thin and the price range will be tight. If we can hold off and build a base at this level, then the uptrend may resume. It will be bearish if current support levels do not hold. I be watching for Candlestick reversal pattern at index support levels for clues. Strictly no positions until i have an anticipation of the market direction.
St-Eng, while i was lookin to short once the support breaks, but, there seems to be a positive divergence now.. hence i'm not going to short this counter anymore.
Thanks to the encouraging words from "Annonymous" in the comments of the last posting. : ) Let's huat huat arh!
DISCLAIMER: This is not an inducement to buy or sell. You should do your own analysis on top of my postings.
