This morning, I messed up a trade. It could be that I am tired after a long weekend in Las Vegas or it could be this emotional fog that has clouded my thinking recently, but whatever the reason, I put in a limit order to sell when I meant to put in a stop limit. The end result was that I missed quite a bit of profit because I busted my trade. Yup, I self-destructed my trade.
Now, the weird part of this is when I put in what I thought was a stop limit, my trade executed instantly and I sat there for a minute wondering what happened. I was actually confused. In my head, the trade should not have executed so far from my stop, but it did. After a bit, I figured out my mistake, and then I was bothered, frustrated, and a little bit angry at myself. How could I have made such a rookie mistake?
Well, my annoyance and other negative feelings are past now, and in my clarity, I want to say two trite but important things. The first is that in trading, as in life, we make mistakes, stupid mistakes sometimes. That is an unavoidable part of being alive and being a trader. Accept it.
The second is that when we make mistakes, our natural inclination is to beat ourselves up over it, to “overwork” the stupidity of it, to indulge ourselves in the negative feel of it. Maybe I am wrong, but it seems this is the natural response to a stupid mistake – ya know, “I should have known better.”
As I write this, I am past all of that. I worked it out in a moment of quiet. To finish my second point, that should be the goal of every trader – let it go. No matter if it is a busted trade from a self-inflicted error or it is a trade that went in the opposite direction of your plan, let it go. Move onto the next trade … Just let it go …
My experience above is both contextual and specific for the question below.
Hi Ed,
I recently inherited a little money, around 60k. My sister and I are meeting with a few advisors and I am doing a little research on investing, since we both haven’t a clue..!!!! I am 45 and she 40. I was wondering about silver??? Do you buy the product or buy stocks of a mining company? If you can give me any advice or point us in the direction in which is a good area to invest would be so much appreciated.
The woman asking this question has an eye on making her money work, which is good, but her thinking is conflated. On the one hand, she says she is seeking the advice of “advisors,” but on the other, she is thinking of investing it on her own, specifically in a fluid commodity. The latter course is highly dangerous, as even experienced traders make stupid mistakes (yup, you got it), so those without knowledge or experience run the risk of losing money to a much higher degree. So, my suggestion is stick with the advisor idea, but find one that represents a conservative mutual fund family, such as American or Vanguard. You can choose within this family of funds to be conservative or you can choose to be more aggressive, depending on your future need for the money. I would suggest, however, before turning over a dime, learn the basics of the fund family. Understand how it all works. Learn the lingo of investing and, above all, get solid with the idea that you are responsible for the outcome of your choices, so make good ones.
Trade in the day; Invest in your life …
