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An interesting article even though not related to the local market by Narender of nextgoodbets
Excerpt - +++++++++++++++++++++++
It has been about four years since I had first started investing in stocks in the Indian stock market. I can clearly remember the losing trades of the first financial year and the only one high profit trade I ever had along with moving from long term investing to short term trading before making a wipe-out trade for the bitterest experience I ever had.
When I started investing money in stocks it was a humble beginning. Nobody gave any encouragement. I have noticed many people starting trading stocks directly, after so many years of getting into a job with the same capital that I started with early on. Folks just follow the famous rule: invest money you can afford to lose. And you will certainly lose if you can
I would say the time that I spent investing into stocks for almost first two years was the most exciting in the last four years! Ever since I stopped buying or selling (it was like bringing a fast car to a grinding halt), I had really lost the excitement in life. I remained passive for the two year period (2009-2010) during which, one medium term but a fantastic bull market had run in the markets, which was like a short preview of the longest bull market (2003-2007) and a window of opportunity.
Looking back I didn’t have an easy way. I was gradually moving from long term investing to short term trading. I certainly felt over-confident when I was betting on junk stocks in bear markets using techniques that should be applied on momentum stocks in bull market times. These are what I had experienced one after another making it difficult to comprehend what was going wrong:
• A near complete wipe-out trade (~90% loss wiping out 50% of total profits of two years in three months time frame)
• Buy & hold in bear markets (to get over short term mindset simple trades failed)
• Trapping at false highs (everytime I buy at high and stocks retreat till I sell at low, losing rest of total profits)
• Grinding halt trade (four stocks all going wrong just because I was a little late for a pullback trade and too early for the bull market, digging losses into original capital)
I wasn’t very much worried about the last one except that it turned my +ve position onto the –ve side. Even while I was holding bleeding shares of selmcl I wasn’t really serious about losses. I remember during that time as I told a friend (Vinay) that I was holding it to see how the pain feels. I realized that it was not only a bitter experience but it made me realize that the pain of losses is always same. This one stock still looks like a black mark in my experience and made me realize one every important lesson: “no matter how much profits we make, a single 90%-99% loss can ruin everything”.
++++++++++++++
Read the full article @
http://colombostockwatch.com/2011/03/in-retrospect-past-four-years-into-trading-stocks/
you can also find this article on his site nextgoodbets.blogspot.com
Excerpt - +++++++++++++++++++++++
It has been about four years since I had first started investing in stocks in the Indian stock market. I can clearly remember the losing trades of the first financial year and the only one high profit trade I ever had along with moving from long term investing to short term trading before making a wipe-out trade for the bitterest experience I ever had.
When I started investing money in stocks it was a humble beginning. Nobody gave any encouragement. I have noticed many people starting trading stocks directly, after so many years of getting into a job with the same capital that I started with early on. Folks just follow the famous rule: invest money you can afford to lose. And you will certainly lose if you can
I would say the time that I spent investing into stocks for almost first two years was the most exciting in the last four years! Ever since I stopped buying or selling (it was like bringing a fast car to a grinding halt), I had really lost the excitement in life. I remained passive for the two year period (2009-2010) during which, one medium term but a fantastic bull market had run in the markets, which was like a short preview of the longest bull market (2003-2007) and a window of opportunity.
Looking back I didn’t have an easy way. I was gradually moving from long term investing to short term trading. I certainly felt over-confident when I was betting on junk stocks in bear markets using techniques that should be applied on momentum stocks in bull market times. These are what I had experienced one after another making it difficult to comprehend what was going wrong:
• A near complete wipe-out trade (~90% loss wiping out 50% of total profits of two years in three months time frame)
• Buy & hold in bear markets (to get over short term mindset simple trades failed)
• Trapping at false highs (everytime I buy at high and stocks retreat till I sell at low, losing rest of total profits)
• Grinding halt trade (four stocks all going wrong just because I was a little late for a pullback trade and too early for the bull market, digging losses into original capital)
I wasn’t very much worried about the last one except that it turned my +ve position onto the –ve side. Even while I was holding bleeding shares of selmcl I wasn’t really serious about losses. I remember during that time as I told a friend (Vinay) that I was holding it to see how the pain feels. I realized that it was not only a bitter experience but it made me realize that the pain of losses is always same. This one stock still looks like a black mark in my experience and made me realize one every important lesson: “no matter how much profits we make, a single 90%-99% loss can ruin everything”.
++++++++++++++
Read the full article @
http://colombostockwatch.com/2011/03/in-retrospect-past-four-years-into-trading-stocks/
you can also find this article on his site nextgoodbets.blogspot.com
