Yesterday I wrote a blog on how to use the ideas from others to add to your trading game. At SMB we share a lot of what we do so others can learn. Yesterday a Reader took exception to something that we have shared, our best AM idea.
I had something that worked for me, but I have lost my conviction because of listening to too many other people. The more I trade, the more my emotions get in the way, and all I learn is that everything I think I know is subject to change. Computers have changed the way stocks prices react to patterns so that you cannot predict what people will do, so much as you must now attempt to figure out how the computer is going to try to screw the herd, and ride it’s wake?
I have often times wondered if your rec of the morning makes a good target for powerful contrarians guaranteed a fresh supply of weak hands, and yes, I’ve wondered if that was in fact SMB capital. Not only were GMCR and SODA GREAT shorts, but they were some of the best of their rec.d days (rec.d as longs, made championship, killer shorts), and I don’t believe it is a coincidence.
Weak shorts make $NFLX so strong, and what better way to corral a bunch of weak longs than to offer a rec for the day, creating a possible easy takedown.
I do not know everything, and the scale of influence of investment firms is not an area where I have expertise. I just think if somebody was going to be able to decipher this market, it would be those that have written books, blogs and have proprietary trading firms. That is why I trusted your recs 2 days in a row, and those just happened to be the worst plays for those days, and those days just happened to be critical for my trading, which I can no longer do because of the damage to my account.
We encourage debate on this blog and certainly SMB is far from perfect, but there was a lot wrong with the comment above. Let’s see if we can learn from these mistakes.
1) Do not copy the trades of others blindly. See if you can make them your own and if so, them make them your own.
2) For all trades, you must first determine your stop for if the stock trades against you. No one trade should ever so much as even stop you out for one day, let alone do serious damage to your trading account.
3) Trading ideas are ideas. If the market trends against your idea or in this case our ideas, then take the other side of the trade.
4) Never blame anyone else for your losses. Never.
5) After each losing trade, first determine what you learned. Thank the market for it’s learning opportunity.
6) Judge your trades on the process and not your results.
7) Do not get lost in an endless opportunity to find conspiracies in the market place.
8) If you spot a pattern, no matter how it develops, then exploit it. If someone was fading our AM idea then fade it as well. That would be awesome if that were the case since all you would then have to do is do the opposite. Think Opposite George from Seinfeld.
9) If you cannot control your emotions while you trade then work on that first, and leave your money in your bank account.
10) One Good Trade, and then One Good Trade, and then One Good Trade.
There is still hope for that same trader. We can always chose to change our mindset. A few hours later he sent us this:
Sorry. Didn’t get much sleep the night before I wrote this comment, and I was really mad at myself, but had not realized this fact. I don’t actually blindly take these recs, so much as try to make them work for me, and that did not work. I take the blame for my stupid trades. Everyone who is getting on my case here is right, I don’t really have a leg to stand on. My apology to SMB.
Yes, I have bad risk habits. Yes, I’m trying to make back money and it is driving me crazy. Yes, I am trying to convert to an open minded trader from a pure bear, and at the worst time ever. Yes, I’d probably be better off taking the money I might put in my account and go on a vacation.
Author, One Good Trade