Monday, December 7, 2009

Learning To Ride Trends...


When I first started trading, I used to take really minor profits. I didn't know anything about money management strategies, but through a lot of trades with very minor profits, I was able to achieve a ROI of about 12% in my first year of trading. I had very little capital back then - even less than I have now. I remember only being able to own three or four stocks at a time then. So that first year of trading was actually pretty good for me.

Back then, I was trading the following stocks:

AMZN... bought at around $32
BHP... bought at around $45
TIF... bought at around $32
AMD... bought at around $21
ET (now known as ETFC)... bought at around $23
ABER (now known as HWD)... bought at around $33

In hindsight, I made some drastic mistakes by not realising that AMZN, BHP, and TIF could have been worth so much more. I didn't realise the importance of learning how to ride a trend. AMZN could have been a $10,000 profit for me - at least.

If I took profit on all my winning positions today, I'd have a ROI of 13.7%. However, I'm sticking to my plan, looking to the long term, and learning how to ride a trend this time.

I realise that by withdrawing from my portfolio in favour of PDO, I might be engaging in some serious self-sabotage. I could be staring at very stellar stock market gains six months from now and be lamenting that I should have kept more of BAC.

Finally, I think I've gotten to the point in my trading where I'm saying I deserve more from this position.

In my diva opinion, the best thing that could happen to your money management is owning a lot of shares at the lowest price. Duh! But implementing it flawlessly?

That requires a lot of skill!


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