Tuesday, May 24, 2011

I Suck

Hey there,

First of all, I still have 2 brand new books to give away lol. 1st is The Intelligent Investor by Benjamin Graham and the 2nd is Buffetology Workbook by Mary Buffet and David Clark. I’ve finished reading both books and they are both awesome. To make it super simple, just like the page on facebook and as soon as I get 50 likes, I’ll randomly pick a person and give the 1st one away, as soon as I get 100 likes, I’ll give away the 2nd. So if you wanna stand a chance to win these books be sure to check out the facebook page and like it!

www.facebook.com/theunintelligentinvestor

Now, for those of you who participated in the trading places competition, congratulations, the competition is finally over. Does not matter what place you ended up, as long as you learnt something from the experience (I’m saying this only because I did very badly lol. If I did well, it would be something like you guys all suck and I'm awesome).

So in summary, I ended up with 187 086 dollars which means I was ranked about 2700 in Australia FML. I cannot take a snapshot of what my portfolio was like because of copyright reasons but I’ll list what I was holding at the end of the game.

IGR
OZL
ARU
TPM
EWC
RIO
WTF

My best trade was with EWC, making me about 4000 dollars. Every other profit was negligible and other trades ended up in losses. I also made about 1000 dollars in dividens.

Now, what happened?

I was doing very well up till the end of the 2nd week. After that, things started going downhill and never recovered. So I did okay in the 1st week and decided to take more risk for the 2nd week. It paid off and I was ranked 22nd in Australia briefly. High risk, high reward, correct? I was trading mostly in penny stocks so every tiny movement equated to thousands in profit or loss. I did not randomly take position in small cap companies. I had a few criteria that I stuck to. Basically, they were Darvas Box breakthroughs as well as moving average crossovers, 21 day and 15 day.

However, after the 2nd week, I completely lost track of my portfolio. I woke up and got to the hospital before markets opened and got home after they closed. As a result I was always behind and because of the interface, I could not place orders when the markets were closed. By the 3rd week, I was so far behind I didn’t know how to recover. With the amount of risk I took, if you didnt keep a very close eye on your portfolio, you can lose everything, which was what happened.

If I had the time, or if the interface allowed us to place stop loss orders, I would have liquidated most of my portfolio when the stop losses came into play and focus on managing drawdowns for the remainder of the competition. If I had did that, I would have done a lot better. Oh well, lesson learnt.

Another thing that I learnt was that 15 and 21 day moving average was way too long for this very short competition. By the time trends establish themselves the competition would have ended already. I probably should have gone with something a lot shorter like 5 and 10 days.

In conclusion, day trading is definitely not suitable for you if you’re a medical student with no access to the internet while in the hospital. To be honest, I didn’t anticipate that I’ll spend so much time in the hospital. In addition, for such a short competition, 15 and 21 day moving average takes too long and managing downside is as important if not more important than making good trades: e.g. if I didn’t make a single trade for the entire competition, and bought a random company on the last day, I would have ranked higher than I did lol.

So for those of you who did participate in the competition, how did you go? Hopefully a lot better that I did. What did you learn? For those of you who didn’t, I hope to be competing against you next year I promise you I’ll do a lot better, and feel free to drop a comment telling me how badly I did and how much I sucked.

Thanks for reading!

Next post on Thursday :)

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