The Wrap 2/1/12

{+++} I thought I would talk a bit about trader’s remorse. I bring up this topic because there isn’t a day that goes by where I didn’t wish I had held something longer, sold a little sooner, bought a little more, or had a little less. My stops were too tight or not loose enough. It goes on and on.

We wait for the bell to ring every morning like jockeys at the gate. The hair on your neck rises, blood is pumping,  your eyes are focused like a Peregrine falcon. You are a rainmaker and a master of the universe. The market opens and your stock opens at 44, but you sold it at 42 the day before. Blood is now pumping faster from anger, and this nauseating knot starts forming in your stomach as the feeling of excitement switches to one of madness and self loathing. Maybe you break a pencil or kick the waste basket.

Ain’t worth it. Let it go.

I love trading with you guys on the chat room and I actually chuckle everyday to the banter. Some of the comments today were hysterical.

It’ s all about time frames. Some of you guys are day traders, some are swing traders, some of you hold a day or two, some a few weeks with your holding periods. The best thing to do is live with the decision that you made. Don’t crush yourself mentally the next day if the stock you sold today goes hog wild to the upside tomorrow. At the time it felt like the right thing to do, so don’t kill yourself.

I sell early and buy late all the time, that’s what better traders try to do. Otherwise you will find yourself trying to pick bottoms and tops and that is a losers game. I sold or lightened up on some things today that may rip higher tomorrow. I had some remorse because I still love the charts, but my instinct told me to lighten up or sell. If the market gaps down I will feel good, if it explodes higher I  will feel stupid. I don’t stay upset because I can reenter the same stock or find another. I always say stocks are like taxis, there is always another one in five minutes.

Frankly what I would love to see is a big flush in the market, so I can aggressively buy a dip I can believe in. Then I will be able to feel better about holding two or three weeks. That’s where real money is made.

The S&P bounced today after four down days and you will be hard pressed to find a bear in the woods right now, let alone in the market. The VIX falls everyday, Bernanke will keep rates at zero for infinity and I guess Europe is thriving again.

The market isn’t the economy, it rarely is, so this can keep going. Just be careful. In this tape it’s probably good to be so.

Have a great night. I started the new P&L for February tonight and I have carried over some names from last month.



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