Confessions of a desperate trader

Let'see....I am not quite sure how to start this. How about the beginning?

I woke up late this morning feeling pretty good. I had decided last night I would take a loss on my now rather huge SWC position. I guess for those of you who are uninformed, I should go back a little further. I hope the regular readers wouldn't mind this small digression. I had entered SWC day before yesterday at 13.44. It had ended the day at around 3% profit for me. The next morning i.e. yesterday, I wasnt able to watch the markets in the morning hours. I have a stop loss for all my positions (except NEP) but its a mental stop loss. So, even though I was going to be away, I decided against entering the stop loss. What difference could a couple of hours make in a position in which I was already decently up, right? Anyway, to cut a long story short, the complete details of which can be found here, I ended the day almost doubling my position at 12.70 (I hadn't averaged down in over a year before this) and the stock ending at support on 12.51.

Back to this morning.....So, I woke up thinking that if the stock broke 12.50, I would sell it without hesitation, learn from the mistakes and get on with my life. Opened my account to have a look at the pre-market around 8:30 and it was down to almost 12!! Now, this was a different ball game altogether! I was ready to take a loss at 12.50 but 12??!! I decided to give the stock a little more time. Surely, the gap could be closed after a 10% down day yesterday.

Well, within around the first 5 minutes, the stock broke 12 and went straight to 11.60. Let me tell you dear readers, if I say that I didn't feel good at that moment, that would be the understatement of the year. And all because I was stupid and careless enough not to enter the stop in before I left yesterday! Remember, thanks to me averaging down at 12.70, the first time I had averaged down in over a year and something that I would never ever recommend, I had a large position in the stock. Much larger than the positions I usually take. It finally went below 11.50.

I was long also DXCM at that time. I decided to enter a stop loss in that at 9.48 while it was trading at 9.55. But by mistake, and I dont make mistakes like this - ever- I entered a stop limit instead of a stop loss making me exit my position at 9.55. Small difference, I know, but I hope this gives you readers an idea of the kind of day I was having and the mental state I was in. From the proceeds of this stock, I took a small position in SRS as a hedge against my long positions. And as soon as I took it, the markets turned from down 80 points to down single digits. Yes, this was the kind of day I was having. I wondered what I had done to incur the wrath of the stock Gods. Certainly, the stock Gods were displeased.

I hope that from the above, you all have an idea of the mental state I was in. It is necessary that you do because only an understanding and appreciation of that could possibly make you understand what I did next. The only consolation that I had at this time, if any, was that at least I wasn't on margin. I had seen my almost 10% gains for the month disappear in less than a week and was now negative for the month.

In a moment of madness - it has to be madness, there can be no other explanation - I decided to double my existing position at 11.65. And yes, I was in margin now - 50% in fact. I guess there was some thinking behind my decision. I had seen volume to the upside now. PAL, also a palladium producer which moves along with SWC, had started a move up and was doing pretty well. By this time, losses didn't mean much to me. So, I decided to place this one large bet with a stop loss at 11.48, the low of the day. If it didn't work, I would lose just a little more and what did a little more matter by now anyway. As much as I try, you being the smart readers that you are, I cant defend my actions either to you and most importantly, to myself. Like I said, I was doing stuff and making mistakes I hadn't made in over a year. Certainly I was desperate, and hence the title - Confessions of a desperate trader.

To cut this already pretty long story short, the stock Gods finally took pity on me. I sold my now very large position at 12.11 and 12.15 for a very small overall loss. Relieved and carefree now, I decided to sell my SRS position too for a small loss. You might think that that it turned out to be a smart move in the end but it was not. It is the most stupid thing I could have possibly done at that time. That's why this post gets the label "mistake".

Admitting to all these mistakes in a public forum like this hasn't been easy. But like I wrote yesterday, I could quite possibly lie to you readers but how can I lie to myself.

I ended the day still positive for the month, but the lessons learnt this week should and would not be wasted or forgotten. I will be back later this weekend with a post trying to figure out the mistakes made in my worst trading week for over a year and how to correct them.

Hope all you guys fared better than me. If you had a bad week too, lets keep learning and try and become the best traders we can be. Good Luck and thanks for reading!

BTW, I entered SBIB later in the day. As I got up to leave the room for a few minutes, I had a smile on my face. I had a stop loss entered.