Moment of clarity?

Monday, 31st May 2010 21:12 - by Boredmum

As you know, I tend to trade from time to time, sometimes successfully and sometimes not. On Wednesday of this week I noted the chat on lse.co.uk in the morning, seeing that Matra (TIDM code: MTA) had released an RNS that wasn’t good news. Well, the share price opened down around 54%! I figured that had to be good for a trade. I purchased around 2.25p and sold that same day at 2.6p. After costs, I had slightly over 10%. Not bad, and at that I should have left it. The following day, I noted that I could buy for 2.15p. Even as I was getting my quote, I didn’t have the confidence of the previous day and something was telling me that I wouldn’t be so lucky second time round. I should have listened to those niggles, but no, I accepted the quote. Well, of course, a rise of a tiny amount would have given me break-even. It then proceeded to fall. I cut it around 1.95 to 2p. I had lost the previous days profits. Now, the thing is I didn’t just cut it that easily. At first, I was thinking; ‘This has to bounce back soon. Possibly not today, but soon. What shall I let go in my portfolio to cover it?’ That is when it hit me; ‘What on earth was I doing?’ Holding stocks that I knew nothing about, shares that had been a day-trade gone wrong. In an instance, I sold Matra, Nostra Terra (TIDM code: NTOG), and Advance Power Company (TIDM code: APC). I didn’t actually want to have any of them and was holding for the wrong reasons, and then I bought more Churchill Mining (TIDM code: CHL). Now I understand Churchill Mining and really believe in their prospects, although that doesn’t mean that I am fully protected from any downside. It just means that I am comfortable with holding it. I felt strangely liberated in letting these shares go. I thought ‘I don’t actually care if they go up tomorrow. I have cut them for the right reason and if Churchill Mining takes a year or 3 years to reach potential I don’t mind.’ You have to understand that this is a really difficult trading environment we are in. Sometimes you win and sometimes you don’t. My portfolio has suffered greatly the last month and that is why, for now, I only hold one trading share in my portfolio and everything else is an investment that should hopefully weather the storm. Coincidently, Churchill Mining went up the next day; at one point by 6%...and the others fell. Nostra Terra fell by 26%. It is important to do what is right for you. Don’t hold stocks for the wrong reason.