Saturday, January 9, 2010

About me....and my experiences with trading

I started investing when DOW crossed 13,000 while I was a still a graduate student. What was not to like about it? I had seen the market moving up for months and Chinese smallcaps were on fire. Everyone of TV was calling for months, rather years of more gains!! Surely, it was money in the bank. So, I started by buying small Chinese stocks which were sure to make me rich beyond by wildest dreams. What the heck...I was going for multi-baggers. Nothing less would do. No prizes for guessing how this story ended. I ended up investing more than I had planned to or could afford to (low five figures - a king's ransom for a grad student!)in stock such as WWAT (bought in 2.20s and now at 0.10) and CPSL (anybody remember this one? :)...Common, many of you know this stock). Well, the bottom line is that this account was worth $2500 last March. Oh well....

But wait....there was light at the end of the tunnel (though it seemed as an approaching train at first) and this story too, like all stories should, has the proverbial silver lining.

I was determined to get my money back from the market. In hindsight, that was really stupid thinking and this story could have so very easily ended without the silver lining. Anyway, I knew by now that buy and hold wasn't for me. So, this is how I took to Technical Analysis. I wish I could say that it was all easy from here but sadly and luckily (go figure that out!), that wasn't the case. I was soon to realize that taking a loss was pretty much the hardest thing I have had to learn all my life. I started doing better but I think the biggest change in my thinking, and by extension my trading results, came when I first read "Trading in the Zone". I highly recommend it to all of you who haven't yet crossed paths with this book. I started small (didn't have much money to risk) with an account in low four figures. The commissions were killing me but I knew I was on to something. Slowly and slowly, I got better. Learnt from my mistakes. I stopped making one mistake and was soon making another. This continued the entire last year (and is still continuing even now!).

And now for the silver lining....I was up ~ 175% last year after commissions. But wait, there is more!! In my first account (remember the once $2500 one), my longest stock position was CNEH (now NEP). When the account was as low as $2500 in March, I think this stock was less than 1.50. Well, now it trades at 10+!! So, I am glad to say, these profits coupled with the 175% gains in the trading account, I finally managed to break even two weeks before the previous year ended and am now finally in the green!!

Which brings us to the purpose of this blog. I have been thinking/trying to maintain a trading journal for months now but have never got down to it. So, this is finally it and am determined to be regular with this blog. I have lots to learn and improve as a trader and hopefully this blog will go a long way in helping me do that. For example, I still occasionally don't respect my stop losses and I am hoping reporting my positions here will stop me from doing something so stupid. I am a stage where I am still not very comfortable with losing money on a trade though I do get more pleasure out of a well taken loss than with a fluke profit. And the scars of the first year are yet to heal due to which I find myself taking profits too quickly and not letting my winners run.

Well, here goes nothing....

2 comments:

Keith said...

Found it! LOL.

I've heard many times that most traders bust an account once or twice before they figure it out. It looks like you just avoided it. Congrats.

I haven't read that book, but I'll add it to my list. Who is the author? There are two books on Amazon with similar titles.

The book that really changed my trading and got me over that hump was Technical Analysis in Multiple Time Frames by Brian Shannon. It gave me an entirely different way to look at trading.

positiontrader said...

Thanks! Yeah, lucky and dont I know it! But I sure didnt feel lucky when the account was down around 80%. lol

I still hold most of my NEP position, so we will see how it goes.

I highly highly recommend the book. A slightly tough read since the author has the habit of making the same point again and again. BTW, the author is Mark Douglas.

Funny you bring up the book by Shannon. I have been wanting to read it for a long time but have never got down to it. Maybe your recommendation will finally do the trick!