I would say the hardest part about closing out the loss was accepting it. I had to accept it wasn’t going to rebound soon and I made a mistake. It’s the hard part of looking yourself in the mirror and being honest with yourself about it. Sure I could have easily said I had 1,000 shares, but that is not being transparent. It is refreshing to be completely honest with everyone about wins and losses.
In writing this post I want to answer both Ashley’s and Lam’s questions that they shot over to me. Lam’s question was how do you recover from a big loss and Ashley’s is about risk management.
Getting over this loss happened when I took the weekend to fully accept that I made a bad entry. I analyzed why it happened and I was not in the trading zone. I was distracted and made a bad entry. I should have cut it while up $400. I need to get better about taking the profit while ahead. I really had to swallow the tough pill that I let a loss get so bad. However I have learned not to live in the past. I can’t change what happened, but I can learn from it to improve my trades in the future. Day trading is about being present in the moment. If my mind is caught up in a past trade or overthinking or clouding my judgement it will be a bad trade. So my best recommendation is accept you can’t changed what happened in that trade. It is ok you are not perfect. Size smaller until you gain your confidence again. Lock profits quickly if you have to and try to stay green.
I feel like my big loss was a basic risk to reward novice mistake. I saw the stock dropping and I didn’t cut the loss. I saw the momentum was going down. To me I enjoy shorting a stock from the top or buying at the bottom. I did not wait for 3 greens( 1,2,5 min chart) to go long . My best example for risk reward was my entry today on INSY. I saw that it had hit a new 52 week low of 12.50 and it was at 12.96. The high of the day was 14.23. So to me there was .46 cents to the downside and the whole year to the upside. My target was preferable up to 14 if it could get up there, but I pay attention to price action and try to lock a profit before it drops. So I watched it go up to 13.47 and it was struggling. I thought it might tank the rest of the day. So I went ahead and locked my profits at 13.40. I have learned taking a profit is always better than a loss. The goal to grow your account is consistent wins. There are some wins better than others, however all help to grow your account.
A good entry is crucial in your trade being easy and stress free. When you chase the price action and enter in the middle it is really easy for momentum to shift and you end up under water. If you are stressed about your entry don’t let it go against you. For me I have found I tend to have bad entries around 1030 am so for me my goal is to either stay in a trade or try to sit on my hands.
My office is also my daughter’s playroom as well as our workout room, so I will try to get in a little home work out. Or go to get a snack, as I tend to forget to eat lately while trading. I become engrossed with price action. All part of my plan to get balance back in my life.
As always, I love hearing how I have helped you or if you have questions you would like answered. I was brand new to day trading not long ago and now I feel blessed to have stumbled across Tim Sykes’ page armed with the DVDs to help learn the basics.
If you have a bad day. Don’t let it cloud your judgement. If needed step away for a day or two. Digest and more forward.
This blog is for information purposes I am not a registered securities broker-dealer or an investment advisor. The information here is not intended as securities brokerage, investment or as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund.