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Your Biggest Loss so far and its % of Invested Amt
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equator2010
Senior |
08-Jan-2009 14:36
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Thank you elfinchilde and everyone, sincerely, who had taken the time to give suggestions and offer your valuable perspective on this. Actually my mistakes was over-extending myself that I had a margin call. On top of that the rally set off the alarm bells (in someone's head - not mine) ringing. (By inference you know what position I took when I mentioned that rally was not in my favor). That "someone" hankered after me every hour or so to close my positions, and kept on telling me horror stories . I did as he instructed and the next day the market plunged. So I closed at the highest price ever and now the prices are now in the territory I wanted them to be according to my original plan. Suffice to say that I need to learn to be resolute in sticking to my original plan. I know some of the more experienced traders will tell me not to listen to others; in my position however (and not many will understand), this was someone related who had over "50 years of experience" and had pressed hard on me for fear that I might lose my capital. My response t this incident is this: perhaps someone up there wanted me to learn some lessons from this. Perhaps the earlier smaller losses weren't strong enough signals. Perhaps a $20,000 loss would do the trick. It did. A truly painful lesson (if you can stand in my shoes), but I have learnt a couple of important lessons which I mentioned in my earlier posts. Once again, thank you everyone for your insights and constructive comments. |
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elfinchilde
Elite |
08-Jan-2009 14:06
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hi equator, apologies first for my belated reply (am on hols still): but on stop losses and 'is it normal for beginner traders' etc: yes, most novice traders usually bust their accounts. it's what we call tuition fees to the market. been there done that myself long ago. 
consider it positively though: a learning experience, since the adage of 'once bitten twice shy' holds true. the thing is this: if you truly wish to become a trader, then to make up your mind and discipline yourself, such that you lower the risk of exposing yourself to such losses again (25% of invested capital). a lot of people give up after losses, however, and will avoid the market or become very negative, doubting people who can succeed in it. that is merely negative image projection on their part. the fact is that there are successful traders out there. but there are very few. because what is required to be a full time trader (which is what i'm currently doing) are the qualities of extreme rationality--to the point of cold-bloodedness, if i may say so--and coolness under pressure. Discipline is a must. Never fall in love with a stock, never hesitate to cut loss. Also: always move on. Remember: hindsight is perfect. No sense kicking yourself for something you "missed", because that is knowledge with hindsight, not foresight. important tho to learn theh trends, so that when they repeat, you know what's more likely to happen. Openness of mind helps too: we gotta realise that each individual is different, so you'll have to, in time, create a strategy that works for yourself. strategy-wise, there are many. some play short term, some play longterm. it's entirely up to you to find out. you need to become so familiar with the counters in your hand that you literally live and breathe them, and know what every tick is likely to mean. Note: key word is likely, not definitely. Because NO ONE can ever know 100% sure what the market is going to do. For myself, as a techie, it's all about probability. we simply try to be more than 50% accurate. the rest of it is about money management and risk managemnet. if i may say so: i suspect you may not have approportioned your funds rightly? and calculated risk-reward rightly. such that even with a stop loss in place, the loss was 25%? because with stop losses rightly applied, as a trader (contrary to longterm investor), you should ideally not be taking such huge losses on overall capital. may be good to sit down, and calmly assess yourself: what are your strengths in trading, what are your flaws? and then to derive rules that help you yourself. they can be simple things, eg, not trading between 0900-0915 on the day after a DJIA rally (if you are of an impulsive nature, for instance). or to stick only with certain types of stocks. to continue or to give up trading: what does your heart say? only you will know the right decision. be aware however, that it is not easy to be a successful trader. the 'failure rate' is 95%. hope this helps, cheers! |
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crimson
Senior |
08-Jan-2009 13:23
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In such situation playing with big counter, big rise/drop is part and parcel to expect from the counter... thus when playing have to ensure have sufficient deep pocket to absorb more loses, else stay clear, unless you got a good trader tools to help with automating the stop loses...
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DnApeh
Master |
08-Jan-2009 12:40
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Cut loss, then shout loudly: "KNN!" Then move on and search for the next winner.
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Laulan
Master |
08-Jan-2009 12:37
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Do you wait for it to rebound or do you cut the loss which then becomes an overloss?
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Laulan
Master |
08-Jan-2009 12:34
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DBS gapped down from previous close, a hefty 45 to 50 cents. In this situation, you might never get your stop loss price, supposing you have a stop loss of 10 cents. What could be done in this situation? | ||||
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AK_Francis
Supreme |
08-Jan-2009 12:26
Yells: "Happy go lucky, cheers." |
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Some trading houses providing Stock Alert on line software. Services including below, higher, intra day high of low prices ref to your presetting prices on each stock. A pop up msg on screen will be triggered once target's setting is reached. However, no auto Sell or Buy on that settings. AK never use it, unless I hv too many stocks to monitor. Ha ha, small timer mah, bai shei. |
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moneytalk.sg
Member |
08-Jan-2009 11:15
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Local brokerages currently do not have stop orders except for Poems with their trading software. I believe Saxo Capital also have stop orders in their software when buying local stocks. Stop loss is more of one setting a percentage loss to get out once a position hits that percentage loss.
Blogging at moneytalk.sg on the stock market, ETF and anything to do with money.
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leechongpeng
Senior |
08-Jan-2009 09:06
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How do you set a stop loss? Which trading firm allow you to set a stop loss? or do you have to sit down and watch and manuelly sell it off by yourself.
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jeremyow
Senior |
08-Jan-2009 01:03
Yells: "Passionate business investor" |
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What about this conservative averaging down strategy? If got a lot of cash, then buy more lots at each time. E.g. If bought 10 lots of Cosco at $2.50, must make sure still got a lot of cash reserve in case Cosco's price drops further. Then, can buy another say 20 lots at $0.70 to average down. The average price will then be $1.30. This is like a decrease in price of $1.20 which is quite a fair bit of averaging down already (48% reduction in invested price). Total invested capital = $39000. Somemore, you get a lot more shares in Cosco (30 lots altogether). If one does not have a lot of cash to begin with, it's wiser to invest little at a time. E.g. buy 2 lots at $2.50. Then if price drops to $0.70, buy a lot more (e.g. 5 lots). Avearge price is $1.2143. This is still like 50% reduction in invested price. Total capital invested = $8500. Frankly speaking, how long will it take for Cosco to reach $1.30. I don't think it will be forever given this is a large cap stock. Therefore, my opinion is to average down conservatively in this bear market depending on one's cash reserve for investing. If one has deep pockets, feel free to invest heavily. However, if one does not have such deep pockets, do average down conservatively according to one's means. Stock prices are volatile in bear market. One should pace himself carefully to have enough cash to slowly play out this whole bear market. Buy on dips and don't be tempted by short-term rally. Always as a rule of thumb to have extra cash to ride out the volatility. As long one manages to get a fair low price for a good stock and hold on, the next bull run will reward one handsomely. Adopt a conservative buy-and hold approach (buy on dips gradually) to avoid getting burned easily. Once a good low price position is secured (may not necessarily be historic bottom price for a good stock), just let the stock market recover and one's investment value will rise too. Moving in and out of stocks too frequently during volatile time will have a lot of risk. Unless one has a very reliable trading system to aid oneself about price entry and exit signals, then perhaps can stand a fair chance of making short-term profits. Otherwise, I think better to average down slowly and hold until stock market recovers. As long one selects a stock of a good company, the chances of losing one's capital is minimal (though nothing is impossible). |
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AK_Francis
Supreme |
07-Jan-2009 23:43
Yells: "Happy go lucky, cheers." |
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Ha ha, market so bad, finding a job also difficult liao. Kopitiam frd lately claimed that they worked only 2 days for a week. Some claimed chialat. | ||||
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DnApeh
Master |
07-Jan-2009 23:33
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work also can what.
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moneytalk.sg
Member |
07-Jan-2009 23:13
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I agree. Thank God you had a stop loss. Are you still comfortable with trading ? Blogging at moneytalk.sg on the stock market, ETF and anything to do with money. |
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lookcc
Master |
07-Jan-2009 22:42
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if do not continue trading how r u going 2 gain back ur 20k?? | ||||
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singaporegal
Supreme |
07-Jan-2009 21:26
Yells: "Female TA nut" |
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Its a good thing you used the Stop Loss. It could have been worse.
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equator2010
Senior |
06-Jan-2009 12:12
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I see no point in debating further about minor points. I've learnt my lesson and am moving on forward :) Good luck to all. | ||||
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Laulan
Master |
06-Jan-2009 12:06
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Shorting a share is gambling, so is cutting loss and try again buying the same stocks at a lower price (hoping and hoping that it happens, because you are not certain, right?)
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nickyng
Supreme |
06-Jan-2009 11:56
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then SHORT again at that higher price !!! :P cant be wrong again rite?? :P
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equator2010
Senior |
06-Jan-2009 11:54
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well the thing is this: No-one wants to "any-how" buy wrong or short wrong, unless he/she is a gambler. Each one of us makes a buy or sell decision based on one's opinion of a counter and the market. We succeed, we smile, we make mistakes, we learn. Some have learnt, some have not learnt and some are still learning. The worst is probably not to learn at all and assume they know all.
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Laulan
Master |
06-Jan-2009 11:30
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How about buy wrong cut wrong (whipsawed). Short wrong then buy wrong (whipsawed). How about $50K buy sell, cut, buy sell cut until your $50K becomes $1K? Possible? Yes. Better retain your $50K cost and wait for one lucky day then to leave only a few dollars left. Moral : don't anyhow cut loss to feed the market. |
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