Blindsided, I did not see coming – at all – my interest and energy for trading absolutely falling off the cliff. It was a year ago this month that I opened a TD Ameritrade account on a Friday and purchased $2K of GM stock because the price looked so “cheap”. It was under $5 a share and I thought if I just held on to them for a couple years, I could triple or quadruple my money. On the Monday after, the markets soared and I made like $500 overnight, locking in my profit despite my long-term plan. That pure beginner’s luck and the rush of what seemed like easy money sustained me for months as I started on the journey of learning about the markets. Before that, I literally knew nothing about trading, beyond the history chapters on the big crash of the 1930’s and the headlines of the 1987 and dot.com crashes.
I started this blog on November 1st, almost a full year ago. Since then, fortunately, my consulting business has survived the economic downturn, and I just renewed all my service contracts, so things look stable for the future. While my wife lost her job, we’ve come to the conclusion it was a blessing as she would rather stay home with the two kids – the boy is three and a half, and the girl is now eight months – our family’s newest member we were graced with in February. With some changes in the family spending budget, and if we are able to get the health insurance plan as we’ve been quoted, we should be fine monetarily.
I am torn, if I put some extra energy into my business I could grow it some, but I even have less interest in that than I do trading. Seriously, the only thing I have any excitement about recently has been house projects – over the last month, I fully restored one of the kids rooms from the hardfloor floors to the wallpapered closets to the pane glass wood window (which was the hardest item because it literally more than half filled a five-gallon bucket with paint chips). Finishing up the house is compelling as the results happen as you go, I can guarantee the outcomes (though I’m slow), the finished products can be enjoyed by the whole family, the financial investment is mostly very minor, and the end is near – I think I can get everything done by the end of next summer. So that’s what I’ve been doing instead of trading recently…
…Ah, trading, the subject of this blog. I fired up the watchlist and charts this morning today for the first time in awhile. I tried last Monday, and the power went out at my office, and the week got crazy busy and I never got the chance to re-focus.
I’m at a cross-roads. I need to get back to trading, or start to reduce my reduce my related expenses, like the monthly data feeds, back-up internet cost, etc.
Trading has become like “working out/going to the gym” – a chore. However, it’s a task that I know once I do on a daily basis, I will start to enjoy and have fun again, but it’s going to take some time for the habit to feel right again. After a year of trading, I can sum up what I know for certain in a couple points:
1) I need to be engaged in the markets/trading everyday. Days-off and vacations are important too, no need to keep up a streak when it will feed into disastrous trading behavior, but extended breaks make me really lose focus. So I need to work everyday at it, and take breathers when needed.
2) I learn more with real money – the lessons have greater impact. I’m still still an advocate for paper trading but it has its limits.
3) Always immediately place stop orders 100% of the time on every position taken.
4) Reduce ordering mistakes – I am human, but this is an arena I can clearly control and improve in.
5) Use small positions – I have been trading with 200 shares, but 100 shares would reduce my risk by half until I show more consistent performance.
Yes, a year of trading and this what I’m sure of in less than 30 words: trade everyday but take short breaks, sim trading is helpful but get to real money ASAP, always use stop orders, reduce ordering mistakes and use small positions at first.
I’m sure I’ve read all those things dozens of times, but I’m not that bright.
So going forward, in any case, I’m going to invest time into every trading day, from at least 9 to 10:30am, in observing and participating in the markets. I’ll start with paper trading and move to using my real account as soon as possible.
I’m going to try every day, and fake it to I make it, as they say.