Stock Trading

Lions Gate Films (LGF) Hits New 52 Week Highs…Without Me

One of the hardest things for me to do when it comes to trading is to remain calm after a position I’ve closed keeps heading north…without me.

Seriously!

It’s like watching an ex-girlfriend do better…AFTER you break up.

When this happens I become the 16 year old version of myself.  I start stalking the charts.  Checking in every once in awhile…to see how they’re doing.  Pulling up news.  And silently dying inside!

If you have this same problem, then you know what I’m talking about.  It can be really debilitating with regard to carrying out your trading plan.

This happened twice to me last year.  Once with CIGX — I closed for a 30% gain — it moved another 150% higher without me.  And $URG.  I closed for a 65% gain — it went another 50% higher without me.

A few days ago I closed out  $LGF and $P my only two positions. 

Since then $P has kind of crashed (down -13%) and $LGF has kind of taken off (up +8%).  Here are the charts:

I don’t know how long you’ve been trading, but if it’s awhile then you know that bad news and bad calls tend to stand out out more in your mind than the good calls.

Who knows why this is — probably the sadistic nature of us humans — but if you want to rock in the markets — this type of focus has to be crushed!  Mark Douglas of Trading in the Zone tells us that the distributions of wins and losses for any system are random.

Get that?  Completely random!  It’s how they add up over many trades (like 100 trades) that matter.  So in effect, this last trade is nothing!

Did I follow my rules?  Yes.  I got out with a 20-30% gain.  Did I get out at the top?  With $P yes.  With $LGF no.

But that’s not the point.

We’re never going to get in at the exact bottom and get out at the exact top on our trades.  We can’t control that.  But we can control our reactions to our trades, and what they mean to us internally — and we can learn and grow from them.

One final way I get over this is to look at the performance of some of my past trades…after I’ve closed them.  I find that on average some skyrocket — and some crash — and that over many trades they even out.

So forget you Karin H. from seventh grade!  I don’t care how well you did after we broke up, I’m moving onward and upward and I’m letting you go!

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