From the Trading Desk Bloopers and Blunders Message Board

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Strategies & Market Trends : From the Trading Desk Bloopers and Blunders

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To: steve goldman who wrote (1)	6/16/1998 4:40:00 PM
From: Bruce Mapes	Read Replies (1) of 20

Well, I can start the ball rolling. A few weeks back, when MANU (Manugistics) gapped down and was down over 6 points for the day, I got in for a bounce off the bottom for a half point and got out 5 minutes later. It proceeded to go down after that and then bounced (or so I thought) so I got greedy and got back in to pick-up another half point to make my $1K bogy for the day. All of a sudden the trading turned around on a rapid swing/volume increase and I was in the losing column quickly. Rather than get out, I hung on and rode it down a couple of points at which time I proceeded to average down. The stock went back up and almost reached my breakeven, but I hung on again and ended up holding over night. That day after the close, MANU made the announcement that they were going to miss earnings and the stock tanked 21 points (times 2) overnight. Overnight I wiped-out almost 3 months of gains. The only smart thing I did was to get out at 29 before it proceeded to go down further. The biggest mistake of my trading career. Lessons Learned: - Once you catch a bounce, get out with the profit, and don't look back or get in again. - Take a loss as soon as the stock goes the opposite direction you thought it would. - Never average down, you just tie-up more and risk more capital. - Don't hang onto a stock overnight when bad news could be brewing - usually the surprise is not a good one. - Don't try to guess the bottom when there is no apparent support nearby. - The high flyers can go down even faster than they went up. When people have made a lot of money quickly, they dump quickly and the price plummets. I look at this experience as tuition (Ivy League) for me. I learned many lessons from this one which I am reminded of every day when I look at my portfolio balance.

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