Something weird happened today. When I started trading with real money less than three months ago, I took out four really stupid trades. I mean, unbelievably stupid. Today I finally closed two of them out.
At the beginning I had absolutely no clue when is a good point to get in and out of a trade. The rational me said, “Don’t touch it! Study more! Paper trade instead.” But sometimes the impatient irrational me wins. She said, “Ah well, you might lose some money but it’ll be a valuable life lesson. Also, imagine if you gain a bit of cash. Wouldn’t that be great?” That little devil! She chose just the right arguments to overcome my aversion to unnecessary risk. At least I didn’t invest huge sums.
So, I ended up buying at the top just before these two stocks crashed. It’s embarrassing. Of course, I didn’t know what to do when they started dropping. Will they turn around? Should I sell and take a loss? – What, losing $20? No way! I hold the bloody thing until it swings around. I don’t need the money right now anyway. Then $20 became $50 and $100…
A short while ago I managed to close out another one of the four early* dumb trades at break-even because it had swung back up, just enough for me to get rid of it. So, I was hopeful with these two. However, it was painful. It was torture to see these red trades sitting in my account each time I logged in.
Today I needed the money to enter new trades. So, I sold those two at a stinging loss to free up the remaining cash. Obviously, I could have paper traded the new stocks. But I thought if I sit and wait for the dumb ones to swing, I prevent myself from potentially making the money back through other trades. Thus, a break-even would be a loss through lost opportunity. Also, I’d deprive myself of the practice.
To my absolute surprise I felt instant relief as I got the transaction confirmation for the sale. I couldn’t believe it. A burden was lifted off my mind. I can’t really explain it. Maybe I had written off that money anyway, and now, at least the failure didn’t stare me in the face anymore.
This was an unexpected experience. Otherwise I certainly don’t rejoice when trades fail. I am pretty fed up with ending red; even when I respect my stops. This is something with which I have gotten a lot better lately by the way. Hey, the mere fact that I have mental stops now is a big step forward.
* Note that these days I distinguish between ‘early’ dumb trades and current ones . Haha! …sigh…