It seems fly was speaking to me today, his “Be Original” post really hit home with me, and if you missed it, I suggest you give it a gander.
I agree wholeheartedly with his philosophy on conviction. Some of my biggest winners, if not all, were made with conviction. Here’s an excerpt from his blog:
“Conviction is a hard thing to manage. It’s not as easy as some people think. Most people believe being stubborn or ignorant is conviction; but that’s simply not the case. To have conviction in a name, one must be fully educated about the facts supporting the reason to be long or short. When a person is stubborn/ignorant, he’s simply being lazy, leaving fate to be decided by time and luck.”
Conviction is something I thought I had with $AAPL @ $430, however the trade went awfully wrong. I entered the trade a few weeks ago, as the stock traded back above $430. It went to $470 almost in a straight line, and I was patting myself on the back for nailing the bottom.
The stock quickly reversed, and I was a deer in the headlights. I watched it plunge for 4 straight days, all the way back below my entry price.
Once it was back near my entry price, I decided that the sell-off was unfair, due to the market correcting, and decided to give it an overweight positions, adding some April4 weekly options to take advantage of an upcoming pre-earnings run.
Then, the horrible jobs number came Friday, and capitulation was in my sights. I held the position for the majority of the day, as I was not about to sell another gap down. However, 30 minutes before the close on Friday the selling accelerated, and quickly. Capitulation was here.
I sold my stock position and my calls near $422, and watched it trade through $420.
15 minutes later, the stock quickly reversed, trading back above $420 swiftly and with volume. I wanted my position back.
Which brings me to the title of this post.
How could I? How could I go long the very name I just sold, which was once at a profit, but now a loss. Not only did I lose money, but I’m sure I brought others along for the ride, never a good feeling. The trade was so public, and for a reason (to force better discipline) , that there was no way I could buy it back.
The stock closed last Friday like the bottom was in, and I knew I sold it.
The trade replayed in my head at least 20 times over the weekend. But, there was nothing left to be done.
The chart ended up on my monitor more times than I would have liked it to have been over my weekend scans, and I wanted to buy it back.
Monday came, and I was looking for my entry near $423, but I couldn’t pull the trigger. I got a case of the “what-ifs”. What if the trade went again me again? I personally could handle the loss, but the thought of losing more money for others was too much.
Coming into the week I tried my hardest to look at it from a fresh perspective. I wanted back in, but the publicity of it all was too much to bear. I decided to pass.
Maybe this is what separates me from an elite trader? or maybe this is the penalty for being a blogger/trader and keeping things public. Would I have played it differently all together if it had not been for the blog? I’m tempted to say yes, but in reality I have no idea how it would have played out.
One thing is for certain, this is the hardest part about being a trader/blogger.
You’re welcome $AAPL longs, the bottom is in, I sold it.