Lessons Learned

Compilation

I haven't posted anything about my trading for a while because of the ridiculous trades I have done in a short time span. It is simply too much to keep track of and I was also a bit busy with other things like negotiating rates with TDAmeritrade. So I decided to make a compilation of trading lessons I learned from the those ridiculous trades. I hope this helps me review some of the mistakes I made and how to become better. After this, I will continue posting my daily trades. 

Big Picture

Always take a look at the big picture or previous patterns before taking a position. This will let you know how the chart could behave. It will also better help you determine if there is a bear or bull trap coming. It will keep you prepared for the worst.

I wanted to short overnight on the second of February because it looked like it made its move and ready to drop. The trend was a channel and I wanted it to break to the downside for its breakdown. This did not happen so I stopped out. The last bar was the third of February and this was when I wanted to short. What I should have known was that it was bullish and I should be wary of any bearish traps. 

I missed the first half of the day because I was out and came back looking at a descending triangle. I did not notice the previous descending triangle forming and just having it breakout to the upside. I just played where I played without doing homework and was just squeezed out. I later switched to longs, but was just too late. 

Note: The bullish flag you see was something I drew after I got squeezed. This was the second thing I should have noticed before shorting. I forget that the bars could form two different patterns at the same time. However, if I had done my homework before that this chart was bullish, I might have just saved my money and waited for a better confirmation. 

Testing Resistance

During these trades, I have noticed that I have added in my positions too fast without it letting it test the resistances. I also learned about the over/under idea mentioned here by VinnyB.

Here is an example of what I did wrong:

Added so you can track my mistakes if you wanted to yourself.

I added too confident and added to fast without allowing it to test its resistance. Sure, I did reduce risk on the way up, but I should have just killed it when it held the support. 

Note: I should have waited for a better confirmation and added in too quickly. 

Note: I have to again, remember that the bars could form two different things and that the overall picture dictates if the chart will be bullish or bearish. I did reduce risk, but I also added on the way up because I was too short bias. If it goes over and not under, then it's time to get out. 

Don't Overtrade

Take a look at all the commission that piled up on me. 

01/30/2015

02/02/2015

02/03/2015

The fees do definitely add up and if you are in a losing position, then the last picture is the result of overtrading. I definitely fucked up by trading too much and did not wisely add into stocks. The trades I should be making should look like Gene from the 02/02/2015 picture. 

Note: I need to limit my trades to at least 5 a ticker. Anything more than 5 should not be entertained and should be viewed as emotional trading.  

Don't Trade Under Pressure

I noticed myself under time constraints at times and forcing trades due to outside pressures. This has caused me to mistime buys and sells which in turn lost me money. If you do not have the time to trade, then don't. 

Trading under these conditions will lead to mistakes! 

These are some of the things I learned with my new broker SureTrader. I have already been trading for a while, but there is still so much to learn. I will share more mistakes I make as soon as I make them.