This week I posted my first analysis piece on trading view on Piermont Lithium (PLL) – you can see the analysis here – and it was a bit of an interesting experience. Mainly as I looked back and saw the absolutely stellar gains the stock made over the last 5 months (it went from $0.04 to over $1) and has been a 25 bagger if you got in just before the run and likely even more if you got in over the past 2 years or so.
After completing the analysis piece, I thought to myself, this is probably one of the stocks I traded when I first started. As a way of the background when I first started trading, I almost exclusively traded small-cap ASX stocks in the first hour after open (the so-called amateur hour, of which I was one). I used to take big positions (100,000+ shares) of stocks below $0.010 and hope that they would run up a few bpips (not that I knew that’s what they were called then) and make a couple of hundred dollars per transaction; sometimes I’d trade the same stock, 10+ times in that one hour, all manually, no stops (I now look back at this, and think how lucky I got initially).
During my recollection of how amateur I was when I first started out, I thought what would have happened if I had just held PLL over the last few years and not tried my hand at trading. I suspect that I would have made a lot of money, however, to me there are some pretty dangerous assumptions in this.
guess, in essence, whilst I might regret not staying PLL, most of this analysis mentally is made up by looking at the trade in hindsight and seeing the could have been scenario, completely ignoring that it was at odds with my trading system then and would have been at odds with it now too for that matter.
So I guess why is all this relevant, from my personnel experience and that in the dozens of trading books I’ve read, managing FOMO and regret are absolutely keys to managing your trading. If you give in to either of these emotions, your likely to start making bad trades (that is, trades that are not within your plan/strategy), some might make you money, but they won’t help you in the long term. Basically to mind, giving in to either emotions is basically self-sabotage to trading and an absolute no-no if you want to stay in the game long term.
So to stop myself from going down that path, again, I now use a number of techniques that I’ll now share:
Basically in summary, when I feel FOMO or Regret rearing their head, I tell them to bugger off as I know that its going to affect my trading and start destroying my consistency.
Cheers for now,
Nick the Trader Guy
So I guess to kick this blog post off, I should define that I am a classical trend follower in terms of my trading method and that I trade a lot of different markets (beyond just stocks). I don’t do anything particularly fancy in determining trends. I select an entry and exit point and get in the trade.
Why’s this relevant? Well, this post is just a rant about trend reversals and how to deal with them. As I write this post, it’s after the US Markets close on Saturday 20 March 2021, which, as some traders will know, is a triple witching hour day. This means that volumes can be higher than usual, which can create some counter-trend movements.
For me, this resulted in my portfolio swinging by around 1.5%, and most of my current trades moving against me (most are relatively newly opened trades), which is frustrating, to say the least. I still dislike giving back open profits, which I think is one of the most challenging trading psychology elements for a newer trader to overcome.
So how did I deal with this when I looked at my portfolio this morning?
Well, I did a couple of things which I’ll outline:
That’s it for now.
I accidentally deleted the original post when trying to post a new one, so this is a rewrite 😊
After being inspired by a recent episode of Jason Graystone's Always Free Podcast, I've decided to create this blog. You can check out Jason's podcast in the recommended resources or on insta @j_graystone.
In this blog, I plan to document my journey as a trader but as way of background, I've been trading for around four years and started trading small caps on the Australian Stock Exchange. I've been consistent for about 12 months now in both the bear and bull markets we saw in 2020.
I plan to write posts weekly and cover off my thoughts on the markets, something I've learned on my journey, an occasional rant or just something generally market-related.
Whilst what I cover is related to financial markets, I'm not making any recommendations, and I won't be posting tips or the like.
Anyway, thanks for stopping by, and I hope you get something helpful from this blog.
Nick the Trader Guy