My trade on GERN today is one I don’t want to forget anytime soon. There are so many lessons to be learned here that I had to write a blog post on it. (Chart is below)
- I entered in here with 1/3 size. I entered because really liked that reject after the open shove. My plan was to add if it rejected HOD again to get to my full size. If you have been watching my charts for some time on twitter you know that if it breaks that HOD on an early entry like that I always exit the position for the small loss. I do this because if your wrong after that first candle they can really run. This time however I decided to hold and give it until $5… and that is where I deviated from me and tried to trade Alex. I remembered what he said yesterday, first entry is FOMO second is usually right.” I thought, yeah that is the case for me some times to, so I will just hold this time. BIG MISTAKE!!!! I traded Alex at this point not me.
- I added at 5 and my avg was now $4.89. I added another 1/3 so I was in 2/3. What I did do right at that point was I told myself I would not add again until the stuff. But as it kept pushing I started to really regret my choice. My unrealized loss was getting very large and was larger then acceptable for my trading size right now. It risked whipping out 1/2 my month or more! I was getting nervous. I was mad at myself too. I stopped trading the front push of these stocks a long time ago. I usually always wait for the stuff or reject on resistance to get in so I can have a SET RISK! Its part of my new risk management strategy. I was back to trading a style where there is no set risk. I had to just wait and hope it would stuff soon. That’s not my style any more and I was braking all kinds of my rules.
- Anyway, on #3 I finally got that add. New avg .91. Looking at the chart now it was a really nice add. But the problem with that add is it made my risk even bigger–way to big! After it pulled from 5 I decided that to fix the problem with my risk being to big and made my risk level 5. It was an acceptable loss if I had to stop out and was a lower high spot. But when it jumped backup after my add and tested the lower high I got really nervous again.
- The bids just kept stacking and it was looking like I was going to be wrong. By this point I felt like I was just wishing and praying for it to work. I was emotional from my mistakes and was regretting my choices to even hold on to this trade. I could have got out at that massive pull for a little gain. Why didn’t I? I have a rule to exit my positions if I recognize that I messed up and was getting emotional. Why was I not exiting? So at that point when it quickly wicked to .93 with massive bids behind it on the level 2 I exited basically flat. It was a 100% emotional exit. I should have stuck to my new risk of $5. Less then 1 min latter they finally pulled the bids and it started to drop.
I don’t share this because there is something wrong with Alex’s style. Quite the contrary. His style obviously works well for him. But the point is I started to trade what I thought was his approach instead of what is my style, system and rules. That’s just as bad as follow the leader trades in those pump and dump rooms. Trading Alex and not me today caused me to take a monetary risk I could not afford. It caused me to be emotional and not make smart decisions–that exit being a PERFECT example of emotional trading. It caused me to ignore my safeguards and rules. The key takeaway here is you can learn from others, but you have to take their teaching and make them your own!! You have to trade in a way that works for you and that is appropriate for your account and risk tolerance. Now had I taken his advice in the contexts of my rules, risk and sizing things would have been much different for me today. It’s easy to want to replicate someone else because you want to replicate their gains. But trading doesn’t work that way. No highly successful trader will tell you they are successful because they try to replicate someone else every day. They learned from others but then took those things and made a system that works for them. Trade YOU, not someone else!
Great blog post, Much appreciated.