Bad Trading?

Friday, 15th October 2010 09:40 - by Boredmum

This week I was beginning to think that I had lost my ‘edge’ with trading. You see, I just wasn’t getting very much right. In fact, I was getting things very wrong. On one day alone, I had 3 day-trades that went against me. It was hard, but I had to just cut each one and accept that they weren’t going my way and they most likely were not about to change direction any time soon. I decided to have a little trade in Desire Petroleum (TIDM code: DES). DES had dropped about 20% in price that day. I thought there was room to make a few hundred pounds from it, so I bought some and, although it ticked up slightly, it wasn’t to my desired sell price. Then down it went, though I held on into the next day. It dropped again and my initial reaction was to take a few more, then it ticked down again. Now, at this point, I thought this drop is not just a 'tree-shake', remembering my past experience on Tower Resources (TIDM code: TRP), where I had written a piece about ‘the market always knows’. I figured that the market knows something I don’t. There must be a problem with ‘Rachel’ (DES’s current drilling campaign). Many people on the chat boards were stating that target depth wasn’t reached and there was no evidence of a ‘duster’. My instinct was telling me that something wasn’t right and I sold. It left a bad taste in my mouth. I had lost more than I was looking to make and done so in only a day. I was feeling a bit low and feeling that my trading was all so wrong, then I realised something; well, a couple of things. For one, I just had to accept the rough with the smooth. Many times I am successful in my trading, and I have to accept with that there will also be times that I lose. The most important thing that I realised is that, although I got it wrong, I cut all my trades before they became much worse. The three day-trades I cut about 3pm. When I checked at the end of the day, my losses would have doubled if I’d left them open. News came on Desire the following morning; a problem with Rachel, and again my losses would have been much greater. So yes, I lost money and my trades were wrong, but they could have been much worse. It is hard taking a loss, but sometimes you just have to ‘walk away’.