I saw CSR dropping due to a stock offering, suspecting holders would exit worried about the dilution. So I waited, and sure nuff, it fell $1.05, so I entered at the low, and in the AM it went lower. As I tried to buy at my suspected “new bottom,” a roof leak got my attention mid trade, and I did not execute. While I was gone for 90 seconds, the stock went up without me, and I missed my window of opportunity. Now that is luck too, just the wrong kind. So that is one incident, but this happens too often …
The above is as typical as it gets out there. The story is a familiar one because folks who want to trade, or rather, be traders, do not give the act of trading its due. Ad nauseum, trading is work; it is a job that requires your attention the whole time you are in a trade, or it requires that you put your trade on well-planned “auto-pilot” with software. What happened to the gentleman above would not happened if he had prepared properly, and in today’s world of software-related trade execution, one can prepare for a roof leak, or whatever other emergency arises when one is in a trade.
The gentleman attributes his missed opportunity to bad luck. Often, bad luck can hurt a trader, but what he describes is not bad luck – it is lack of knowledge. Every trading platform allows for pre-entering your buy order. Since the gentleman indicates that he knew where he wanted to enter (suspected ‘new bottom’) the question arises – why didn’t he have a standing buy order for that bottom? How could a ninety-second interruption take him out of the game? Additionally, a conditional order set up here would have helped – if this happens, buy at this price, and if that happens, sell at that price, etc. Many trading platforms allow traders to set up a series of conditional orders, which allows them more opportunity to get in or out of a trade successfully, and to do so with little involvement other than to set up the trade. The gentleman needs to learn about the variables of order execution first, and second, he needs to look at his trading platform to see if conditional orders are available.
That he mentions, “… this happens all too often” is a “lack-of-knowledge” tell as well. The ancient adage my mother applied to her ten children goes like this … “Once burned, twice learned.” She taught us that when something bad happens, you need to learn how to avoid that bad thing happening again. Again, ad nauseum, I preach that trading is work and part of that work is an ongoing commitment to learn. Never sit back and think you have it wired because if you do, sometime somewhere a “roof leak” will occur, and you will find yourself wondering, how did I miss that opportunity. Like a good Scout (Boy or Girl), be prepared.
Something I have hung my hat on for many years is the thinking of one of the great athletes of my time – Jack Nicklaus. When a reporter once asked him if he attributed his 19 Major wins to luck Jack responded (and I paraphrase), “Absolutely. The more I practice, the luckier I get.” Think about this the next time you want to attribute a lost opportunity to bad luck.
Trade in the day; invest in your life …
