Good stuff, AA. I think, though, that the only way for a trader or a person to learn these lessons is to experience them. Reading about it is all well and good, but it takes the "school of hard knocks" to make it stick, imo. I still get annoyed when a position continues in "my" direction after I've closed it out. That's human nature, I think. However, it doesn't impact me in the same way as it did before... cuz it's just one trade, and there are more fish to fry.
Personally, I had a similar experience to MM -- though it was 7 shares of a stock that went from 3.5 to 6 where I sold only to watch it run to 10. Still, it was hard to take. Harder to take for me was closing of my (then) EMLX short at a small loss a day or two before its infamous 60 point tumble. I stewed over that for a LONG time... and it still rankles me. However, what I learned is that holding on to that feeling DID ME NO GOOD. I could not turn back time. And more importantly -- I could not hold onto other shorts/longs based on the assumption that if I closed them out I'd miss a 60 point move. Each trade does exist in a vaccuum, though we can take the experiences of each trade and let it inform our trading process.
Though it's not exactly related to your points 1-3, this for some reason this reminds me of the baseball phenomenon of the "fallacy of the next pitch." Man on first, team down by one run. Runner tries to steal... gets thrown out. Next pitch, the batter hits a homer. Sez the announcer "Oh, if he hadn't been thrown out, they'd've taken the lead." Wellll... if he hadn't been thrown out, the pitcher woulda been going from the windup, the catcher might've called a different pitch, or the batter might've been doing a hit and run and taken a different swing. Anyway, I think trading is like that on some level, though I'll leave it to you to figure out exactly how <g>
the freep |
