Friday, March 25, 2011

12 000 Dollar Mistake

Hey there

I was looking through a few companies tonight and found something that really disappointed me a lot.

Take a look at these two charts, which are taken from a software called Bull Charts, check out their website. www.bullsystems.com

Chart for AUT


Chart for MML


What would you have done in this situation if you bought into these companies when they are within the Darvas boxes? As you can see, both of them dropped below the stop losses. So what would your thought process be by then?

Let me tell you my story and I'll start with AUT.

If you look at the first chart, at the start of May AUT established its 1st Darvas box with 2 more coming. I bought $3 000 worth of shares when it broke the $0.715 resistance line. Manage to get them at around $0.80, it was all looking good when the 3rd box was established. Then if you look closely there are 3 days where the prices were just a flat line. What had happened was that AUT announced a capital raising. I was away and did not remove my stop losses which at that time was set at $0.78. After a few days it dropped below that and my shares were automatically sold. I had not only made a loss of $115 including brokerage but I also missed the opportunity to participate in the capital raising. Trust me I was kicking myself and banging my head on the walls for making that mistake then. Ask my housemates if you do not believe me.

Look at what happened next.


FUCK MY LIFE.

As of 24/3/2011, the price was $2.95 even if I didn’t participate in the capital raising, I lost an opportunity to make about $8050.00

Now let us look at MML. If you just look at mid March, it established its 1st Darvas box. I bought 1190 shares at $4.18 and then when it established the 2nd box, I bought an additional 420 shares at 4.67 which brought me to a cost of 6935.60. It then started to drop and it was all sold at exactly $4.00. This gave me a loss of $535.60 including brokerage.

Look at what it is today.


$6.90 F.M.L. I lost an opportunity to make an additional $4173.40.

This brings me to a total of approximately $12 223 in lost revenue.

So yeah those are probably the biggest mistakes I’ve made so far. I guess I only actually only lost about 600 dollars but I could have made about 12 000 dollars more had I not make those mistakes.

So what do you think about my decisions, were they wise at that time? I know the one with AUT was purely my fault for not being on top of my shares when I’m away but what about the decision with MML? Even if you think I was a complete idiot for cutting my loss at that time let me know, we are all still learning after all.

Thanks for reading, please leave comments by clicking on the comment button below or send me an email by clicking on the contact button at the right side of the screen. Also I had just set up a facebook page and twitter page. So if you like what you’ve been reading so far, please do like my page. Thank you!

14 comments:

  1. I sho sho wanna learn from u and learn bout stock
    where should i start?

    Er jie here :)

    ReplyDelete
  2. so i'd like to share my experience where i didn't follow my stop loss and the share price fell from $1.80 to $0.40 and hasn't recovered since 2008. If I had 10,000 shares, it would be a $14,000.

    stay true to your stop losses.

    ReplyDelete
  3. Hey hey, start by liking my page on facebook and checking this blog often!! haha.

    nah joking, I think one of the best ways to start is picking up a basic book, like rich dad poor dad or secrets of a millionare investor.

    or just talking to people, or.... reading this blog ;P

    ReplyDelete
  4. @ david. Ouch but yeah I agree, stop losses are there for a reason.. cut your losers and let your winners run.

    ReplyDelete
  5. Hey Jeff,
    Thanks for posting your blog on the NUFC page. Totally new to trading personally, but hoping to use the Tradingplaces game as a way of learning how to do this properly. Hopefully I can learn many things from you.

    Any other tips beside picking up those basic books?

    ReplyDelete
  6. Hey grimninja, thanks for your comment! remember that i'm a beginner and have lots to learn myself hehe.

    Trading places is a great competition to test out different styles and techniques to see which you prefer, which is what i'm going to do as well.

    I think probably practice, education and of course learning from our mistake or even other's mistakes. Its probably important to have a trading or investing style, adjusting it and sticking to it and i think as beginners that is especially important.

    Thanks for visiting and reading! I hope my posts were helpful, keep coming back if they are! New update coming soon!

    ReplyDelete
  7. This comment has been removed by the author.

    ReplyDelete
  8. Hey aki, thanks for visiting, keep coming back if you like what you read! and if you really really like what you read, tell other about this blog as well.

    I tried opening the link but i didnt work. Is the link correct?

    ReplyDelete
  9. Stop loss orders often turn out to be stop profit orders, but if some type of rising price - trend following is your game then the odd stop loss that turns out to be a stop profit is a necessary evil.

    ReplyDelete
  10. Yeah I definitely agree, I think one of the trend follower's goals is to preserve capital. Plus there is no way we could tell which stop loss will cut our losses or profits, as long as indicators tell us to sell, we sell at that time and try our very best not to regret that decision lol.

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