09/27/16 Recap

Today I just traded RGSE.  I ended the day down -$175 realized, though I am holding a position on RGSE overnight.

My trades on RGSE were not the best.  I got stubborn and too short biased.  I broke my rules and risked a huge loss as a result.  My first trade was good. I shorted into the spike and covered for a small loss when it broke the HOD.  I then shorted again on the next spike.  It was a great entry and I covered 1/4 on the sharp pull.  Where I went wrong was not cutting the trade at my risk of HOD.  I decided instead to add since I was not in really big yet.  I allowed my desire for a green trade to influence my trading plan.  Big NO NO!  Especially on stocks with such small floats.  Then I got stubborn and dug my heals in.  I decided I would fight this POS and carry it overnight if I add to.  I threw out my max $ stop loss rules and went for the ride.  I ignored it basing at 5.50 and just held.  The only positive thing was I got more conservative on when I added, but I should have never got here.  Right now the stock is hovering around my average after hours.  I am hoping for a nice gap down and failed momentum in the morning.

Even if I end up coming out of this with a win, I will not be proud of that win.  The issue with getting stubborn like this and braking my trading rules is that I could have gotten squeezed out (AKA: forced to cover by my broker due to a lack of margin) and blow up my account.  The risk of braking my rules is NOT worth it!  No trade is ever worth it!  In the past I have had a hard time taking losses and fighting a trade.  That issue reared its ugly head again today.  Good traders can take losses when they are proven wrong.  They know they can continue to stalk the trade and make it back later (as I have done over and over again).

Due to this trade showing that I still have some issues with getting stubborn I am implementing three changes to my trading rules:  One, I will bring by per trade max $ loss down to $1,000 and my max daily $ loss down to $2,000.  This will force me to add to my winners more instead of my losers.  Second, I will start to use hard stop losses for my exits.  Third: on stocks under 2 mil float I will only short when there is a set risk on day one, no parabolic entry plays.