Monday, March 1, 2010

Doing well - getting good at taking small losses

OK I have stayed within my rules and I am doing well. Lately I have been getting really good at taking small losses. What broke the cycle is that I vowed to follow Stewie's alerts religiously for all of my trades, and Stewie has no qualms about jettisoning a stock the second he thinks it is going to lose him money. It could (and often is) well above the stop level - he does not wait until it hits the stop. The stock could start to bear flag, have poor price action, be too choppy, or WHATEVER - he doesn't care. In this sense Stewie reminds me of Larry Ellison of Oracle. Larry knows how to make money, and he buys companies, and makes decisions - all based on the BOTTOM LINE and the goal of MAKING MONEY - as soon as someone or something is not cutting it for that purpose, they get shown the DOOR.

We shouldn't get attached to our stocks - in fact that concept that Peter Lynch had about buying companies we know and admire can actually prevent us from parting with our winners. If you hold a winner long enough, it will become a loser. But  today my old habits didn't prevail.  I personally very attached to AAPL the company, but with some help from a friend holding my hand, I jettisoned  30 AAPL@209 before the closing bell.  I had bought these shares at 189 and held them through the downturn last year, so I had enough profit and was relieved to get rid of them. It was fun to sell into strength, and be profitable. This frees up about 6.5k that I can now use in this same account to focus more on Stewie alerts, yeah!

2 comments:

Market Monk said...

Hey,

Congrats on achieving your goal of learning discipline.

May 2010 be your year!

MM

Bob said...

Congrats on the progress! The more I try to do this, the more I recognize that it is the 'small' mental challenges that become the biggest obstacles to my success as a trader. Again - well done and keep updating me/us on your progress - it serves as an encouragement in my own struggles.