Unfortunately, this is one thing that new traders do all the time. (I did it countless times before.) To give all of your profit back on one trade usually means two things: you are trading a size too large / taking too large a risk or you are failing to cut losers quick and holding positions on hopium that they will recover.
You have learned a valuable lesson trading is a game of what you keep. You can make all the profit in the world, but if you fail to keep it, it doesn't matter.
As a trader all you can ever really do is: Cut losers quick, manage your risk, and try to maximize your profits.
The following user says Thank You to tturner86 for this post:
Ok... I am sorry for your loss but hopefully you learned a good lesson from it. Pump and Dump stocks are insidious. The pumpers want you to get caught up in the emotion of the situation...and go with your GUT. You cannot do that and be consistently successful. It is relatively easy to spot P&D's once they really get going, from a chart...the escalating unusual volume and then the share price rising far above the upper Bollinger band.
It is nice of course if you catch such a stock early in the game before it reveals itself and you can ride the wave getting out at the top...but to try to catch that wave at the top is usually fatal.
As far as Alibaba goes, your odds of getting in at the start will be small...You again are getting into something that has a lot of emotion at work. In this stock you run the risk of buying in only when the excitement dies and the early subscribers want to get out and take their profits. IPO's are sort of like a PUMP & Dump cousin to me...they are generating emotion to make their money fast.
IMHO you must learn to divorce yourself from emotion in your stock buys/sells.
Of course the situation is not exactly the same as Facebook which had a ridiculous evaluation and IPO... it took a year or so just for the stock to recover to its IPO price. Facebook had no observable revenues...it was all speculation. Alibaba does have substantial business in China and purports a desire to enter the North American market...I wonder about a backlash to such an idea by North American investors though.
Good luck in your endeavor...not my cup of tea though...too unpredictable...
The following 2 users say Thank You to Underexposed for this post:
What caused me to change my mind was several days of though and coming to the rational conclusion that I had put money into a stock that had NO reason to be doing as well as it had recently, and had turned downward consistently for a few days, and showed no rational reason to reverse that trend.
The time came to cut it free before it sank me even further. I realized I'd hitched my wagon to a turd.
A secondary consideration is that I wanted to free up what's left of my funds in order to be ABLE to participate in the
upcoming Alibaba IPO day mayhem, IF I choose to do so.
Or use them for any other purpose.
I have not made any picks on anything else today.
As for Alibaba's reception in America, I actually don't think that'll be a problem.
I take it that you have visited Alibaba's site and seen how they work? I see it as an innovative combination of the best
features of both amazon and ebay. And there is hardly anything you can think of that you can't find on alibaba.
I think that Amazon and other online retailers have much to fear from Alibaba. I see it as the up-and-coming equivalent
to Wal-Mart, both putting big dents in the bottom lines of the companies that compete in the same markets.
My belief is that it will be both a good opportunity for short term profit taking and for long term investment growth.
I expect it to bounce around a lot, at least at first, but soon establish a steady upward trend that will put a smile on the
face of any long term investor.
The following user says Thank You to Carrerain4 for this post:
I think you have to make up your mind whether you are a trader or an investor.
At least earmark your different accounts for either trading or investing. Short term trading has very little to do with fundamentals. Traders base their decisions on what price is doing in the near term.
Investors should base their decisions on the perceived future value of the company. Knowing the fundamentals of a company an investor can use technical analysis to determine buy and sell levels.
Either way you should have a plan going into your trades as to what you expect to accomplish. What change in price or fundamentals will trigger an exit.
Your journal will help. Make your plan public as to what has to happen for you to enter and exit your trades. You will be surprised at how much pressure you put on yourself to execute your trades according to your plan once you make it public. It is a lot easier to justify changing your plan to yourself than to justify it to an anonymous group on a trading forum.
It is hard to find the Truth when you start your search with a preconceived notion of what the Truth will be.
The following 3 users say Thank You to deaddog for this post:
How much time from now do you think it'll take you to earn enough money to buy your porsche? I'm not referring to how much it'll take for you to earn to buy a porsche and live your lifestyle, but just simply the porsche itself.
Why would you make such inconsiderate comments in this journal @Itchymoku and @Paige???
This guy is recovering from making a really bad trade that wiped out his previous 2 months of earnings...he fell for a Pump and Dump even though he was warned about it....He may be headed for a similar experience in an Alibaba IPO, but that remains to be seen.
And you sideswipe his journal with these comments....you are not helping this newbie at all.
The following 4 users say Thank You to Underexposed for this post:
Oh I didn't mean any sideswiping, I actually haven't really been reading the journal lately as I've been trying to catch up to all the threads I'm subscribed to. Last post I read was #213 and thought he was doing well. I feel bad now.
The title of the journal caught my eye and I felt the urge to pop in and make a quick little reply.
I apologize. I was actually rooting for this guy. I have a really bad habit of not keeping up with journals that have a plethora of posts.
Carrerain4, despite what the market throws at you I think you're a bright guy and to just keep at it. I hope you make a quick recovery.
Last edited by Itchymoku; September 18th, 2014 at 03:16 AM.
The following 4 users say Thank You to Itchymoku for this post: