Hi guys,
It was nice to receive messages recently from old friends from T2W and going back to City Informer - Thankyou.
I have had a hard time recently dealing with what can only be described as an amateur performance in an extremely professional business environment. I am not sure wether this post is 'coming out' a form of therapy or a help to our friends on this board. I cannot believe any of you could be so stupid and irresponsible but here goes:-
First Year trading Account
Shares bought at purchase price £ 1,242,000
Deals closed at selling price £ 1,180,000
Stamp Duty £ 6,200
Commission £ 7,900
Net Loss £ 76,000
Total trades 208
Average purchase value £ 6,000
86 winners (42%) - 118 losers (58%)
We are all well aware of the events and market conditions of the last year (fiscal) and I simply was not equipped to deal with it and had too much ready money as a result of selling a business in February.
The object was to be able to trade from any location , Spain, home or office without all the logistical problems of running a conventional business ie Staff, Premises, Equipment, Stock, Bank Managers etc etc. With my varied business ownership experience and accounting knowledge I was well placed to become a fundamentalist and judge each company on their ability to control all these expenses and to make a profit. What I I didnt know was how to trade and soon learnt that fundamentals counted for very little when it comes to share price movement. 'Money talks - bullshit walks'.
I was priveleged to share the T/A knowledge of my colleagues but again this didnt appear to take into account news flow and especially profit warnings.
I basically had no trading strategy other than Greed which is OK in an advancing market, but when prices are falling it was simply blind faith in the fact that the share price would recover and they didnt. Yes you know the answer NO STOP LOSS POLICY. If I had adopted this policy from the outset I probably at worst could have broken even. What cost me most money was CHASING LOSSES. I found myself watching a price recover to reduce a loss instead of climbing aboard to make a profit. My GREED then turned to FEAR I was unable to hold a position overnight and ride profits for fear of the next profit warning. I cannot tell you how many times I sold Logica for a £200-300 profit when it could have been £1000. Only two days ago I sold 2k Autonomy at 513 and 2k at 520 before close only to see the price shoot to 540 within 20 minutes at close. The problem: I had bought at 536 and having ignored stop loss was forced to buy again at 462. Chasing losses and the fear of the next profit warning lost me an extra £1700.
If there is one major lesson to be shared it is PROTECT YOUR CAPITAL. If I had been disciplined and adopted a
Trading Strategy/Style/Method and employed a stop loss policy and stuck to both regardless and without question I would not have to deal with the horror and the realisation of having wasted what amounts to probably 2 - 3 years salary for the average man - ITS OBSCENE.
No experiment is ever a failure as it can always be used as a bad example.
Some consolation, but I hope the last year has made us all better traders for the future. I am off to the ole hacienda for three weeks now when I shall decide my future plans. Im definitelydown but not out yet and feel sure I will still trade in some format on my return but to what extent who knows.
Be careful out there....Its a jungle!!
Good Luck
Cookie
It was nice to receive messages recently from old friends from T2W and going back to City Informer - Thankyou.
I have had a hard time recently dealing with what can only be described as an amateur performance in an extremely professional business environment. I am not sure wether this post is 'coming out' a form of therapy or a help to our friends on this board. I cannot believe any of you could be so stupid and irresponsible but here goes:-
First Year trading Account
Shares bought at purchase price £ 1,242,000
Deals closed at selling price £ 1,180,000
Stamp Duty £ 6,200
Commission £ 7,900
Net Loss £ 76,000
Total trades 208
Average purchase value £ 6,000
86 winners (42%) - 118 losers (58%)
We are all well aware of the events and market conditions of the last year (fiscal) and I simply was not equipped to deal with it and had too much ready money as a result of selling a business in February.
The object was to be able to trade from any location , Spain, home or office without all the logistical problems of running a conventional business ie Staff, Premises, Equipment, Stock, Bank Managers etc etc. With my varied business ownership experience and accounting knowledge I was well placed to become a fundamentalist and judge each company on their ability to control all these expenses and to make a profit. What I I didnt know was how to trade and soon learnt that fundamentals counted for very little when it comes to share price movement. 'Money talks - bullshit walks'.
I was priveleged to share the T/A knowledge of my colleagues but again this didnt appear to take into account news flow and especially profit warnings.
I basically had no trading strategy other than Greed which is OK in an advancing market, but when prices are falling it was simply blind faith in the fact that the share price would recover and they didnt. Yes you know the answer NO STOP LOSS POLICY. If I had adopted this policy from the outset I probably at worst could have broken even. What cost me most money was CHASING LOSSES. I found myself watching a price recover to reduce a loss instead of climbing aboard to make a profit. My GREED then turned to FEAR I was unable to hold a position overnight and ride profits for fear of the next profit warning. I cannot tell you how many times I sold Logica for a £200-300 profit when it could have been £1000. Only two days ago I sold 2k Autonomy at 513 and 2k at 520 before close only to see the price shoot to 540 within 20 minutes at close. The problem: I had bought at 536 and having ignored stop loss was forced to buy again at 462. Chasing losses and the fear of the next profit warning lost me an extra £1700.
If there is one major lesson to be shared it is PROTECT YOUR CAPITAL. If I had been disciplined and adopted a
Trading Strategy/Style/Method and employed a stop loss policy and stuck to both regardless and without question I would not have to deal with the horror and the realisation of having wasted what amounts to probably 2 - 3 years salary for the average man - ITS OBSCENE.
No experiment is ever a failure as it can always be used as a bad example.
Some consolation, but I hope the last year has made us all better traders for the future. I am off to the ole hacienda for three weeks now when I shall decide my future plans. Im definitelydown but not out yet and feel sure I will still trade in some format on my return but to what extent who knows.
Be careful out there....Its a jungle!!
Good Luck
Cookie
