Let's Do the Math...

... finally, some perhaps elementary trading insight after staring at my battered portfolio, which experienced another nosedive. Why everyone is so worked up about BCS, I haven't a clue.

I closed the day:

-1.75% on the SBA
-2.93% on the Roth IRA

I was especially staring at my idiotic position in BAC, which I unfortunately bought at the highs back in February 2007. Yes, I am still carrying this deadwood around even though I banked some profits on BAC earlier in the year. Anyway, I was pondering why is it taking me so forking long to recover this loss, which is but four figures? Then, as I was contemplating the meaning of trading, it hit me like a beach ball.

I can recover this unrealised loss with my next trade. How? If I stand to make 25% on my next trade, I would have to make sure the profit on my next position offsets my unrealised loss on BAC. I'd then close out both positions and call it a draw. So...

x = my quote unquote drawdown on BAC

x / 0.25 = initial amount to invest in order for 25% profit to equal unrealised loss on BAC

I'm going to do it! I'm going to recover my portfolio - and then some!

And now, I must pack to get ready for my palatial escapade where I'll be in the same time zone as our Yen Friends. Of course this is a business trip, but it doesn't stop me from enjoying the vibrant city life with shops that are open till at least 11 pm. I like to keep things light as logistically, one can do a lot more shopping if the suitcase is relatively empty to begin with. Unfortunately, the wallet's a bit empty too. And perhaps so is the head.

Don't long for me too much, my dear HSFTs...