Trading like a Fool Part 2

Well, its time to refill those glasses dear readers as I am back. And I have a story to tell. And its a sad one. So, go ahead and fill your glasses. I can wait. And for those of you who are still with us, why not read Part 1 of the story while we wait for the rest of the readers to return.

Welcome back dear readers! Let's continue with my tale. I had left you in Part 1 with me taking a small loss in SWC. If it had gone up 3 cents, I would have quit trading for the day and the events recounted below would have never unfolded. If only.....

So, while I was still holding SWC waiting for another opportunity to sell, Goldman Sachs news came out. The market tanked. I felt I must take advantage of this. But how? I thought AIG had popped up on good volume on this news. That made sense to me. Without thinking twice, I took a very large position in AIG. Without even seeing the charts. It was supposed to be a day trade, hence the very large position. I knew nothing about the stock except that it was very volatile. Now, the regular readers of this blog know that this kind of plays are not my trading style. But the temptation to make a quick buck was just too much. And I gave in. Fool tread where angels.....

I got in AIG at around 41.35. I had my sell order at 42. It reached 41.95......And then reversed. Now this would be a good time to grab those tissues and take another sip of your drink. This time it was a matter of 5 cents. Since I had gone into this position without thinking, I didn't have a set stop loss. Alas! The folly!

Meanwhile, I also took a position in RDN in 18.30s seeing the other mortgage insurers run on the news. This was lagging behind, so I got in. And then they all reversed. Soon, it was at 17.55. A quick glance at the charts and I set my stop at 17.45. It never touched that level and quickly reversed again and went back to 18. So, what's wrong, you say dear readers? I will tell you what's long. In my stressed state, I had placed a limit order rather than a stop order! I was out in 17.50s and saw it turn without me! Talk about getting kicked in the nuts while you are already down.....

By now, I had had enough. There is so much a man can take. I got out of AIG in 39.40s for a handsome loss. In one day, my account had fallen around 4%. Two weeks of excellent trading, in which I was up over 5%, blown away by a single days worth of stupidity. That's the market for you dear readers. It strikes when you least expect it to.

The story is not over dear readers. I shall be back. The mistakes from today shall not be forgotten. Lessons will be learnt. I admit my confidence has swung to a low at the moment. How do I plan to get back on my feet and return to my winning ways? For that, there is Part 3 dear readers....Keep refilling those glasses.