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Tuesday, September 26, 2006

Watching From The Sideline


I was just like that guy there watching the market from the sideline yesterday. Market gapped up on opening, but faded that gap quickly. However, by 11am ET, the entire broad market started to rally. Not an easy day for trading, so I opt out. Tough luck for ugly chart though. But as he says, you win some, you lose some.

Had 2 stocks my watchlist (SNDK, MGM), but they didn't pan out. SNDK gapped down & has moved too close to my target, so didn't want to chase it. MGM's risk-reward ratio was not favourable.

I was glad I didn't force myself to take these 2 trades, because they wouldn't have worked out. One of the sins in trading is OVERTRADING. Its the quality, not quantity of trades that count. Always remember Warren Buffet's rule of capital preservation. It is better not to make money than to lose money. I must admit that when I first started trading, I felt compelled to enter new positions everyday. I felt like I HAD to trade, and that if I didn't have new trades for the day, I'm not working. But through some lessons learnt in the market (of course I paid a price for that!) and through more readings, I've learnt to managed my trigger-eager emotion better. When you feel that the conditions are not right, just let it pass. Better opportunities will come by...

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