July 6th Mid-day

Good trades, lost opportunity...

Mrs. Blue Collar and I are both off work today and enjoying the Sunshine finally in Northern New England.

In a short lunch-break while finishing an exterior window trim replacement project, I got a few trades in on OIH. After two stop outs playing for a reversal, I finally did the right thing and go with the rising stock. Picked up 12 cents then sensed a reversal so I sold it. The stock did top out and I took it short about 2 minutes later and got an excellent entry. I covered about 5 minutes later for a 16 cent gain. I then went back up on my porch roof to complete my project and put away my tools. Got back down to the computer and darn it but the stock had fallen, and fallen some more; 82 more cents down from where I got out. I got only 15% of the move. Once again... haste costs me money. The trade was never threatened by a retracement/pullback. Mrs. Blue Collar and I are headed out for a motorcycle ride so I don't expect any more trades on the day.

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2 for 4 trades, 50% win rate. Gain of $27 in 30 minutes of live trading.

I'm not alone...

I found this article about young hedge-fund entrepreneur Merritt Graves at Timmay's site. Written by Imogen Rose-Smith, it chronicles the development of young Mr. Graves into a full-fledged hedge-fund player. I highly recommend reading it if only for inspiration.
From the article, I was impressed with a couple things:

1) His persistence, even after losing all his own money twice as well as someone else's money on his third try.
The old adage that Quitters Never Win is so true.

2) His presence of mind after his three set-backs to step back and "...monitor the market rather than trade it, teaching himself to sense where stocks were moving by watching the tape. He read about investing and behavioral finance..."

In the same vein, I give you this from Scott Farnham's Trading Manifesto:
"I started in 2002 and watched the market, learning my craft for 2 years before I actually traded. I thought it was important to see what happened in all types of markets, up, down and sideways before I committed myself into this business."


3) "... (He)...identifed a major weakness in his trading: a tendency to double down on declining positions in an attempt to make his money back quickly and end the pain of losses."

Anyone who has been reading this blog since its inception, knows my battle with this very problem. It is a horrible habit to fall into. Like most risky/dangerous behavior, it produces enough of a thrill (or, success) that it holds onto you, or should I say, you hold onto it; despite the agony it causes you, or should I say, you cause yourself.

Good trading to you all. Battle your demons with every bit of energy within you.