I know this may be irrelevant to this Music Channel of mine and I know many of you may be too young to understand this, but I really wish to share my experience with you so that, if you do understand, you can at the very least, be fortunate enough to learn from my mistake at a young age.
I'm writing this to share with you my most painful experience of gambling and being gung-ho in the stock derivatives market. I was devastated for the whole of last week. Below is an extract of my email to my close friends about my experience. I’ve covered up the numbers not to reveal the amount of damage that I’ve received from my mistake. There may be some technical details that you may not understand.
“For the past couple weeks, I have been making consistent profits on 3 to 6 option contracts. However, last Friday. On the basis of my stupid instinct, novice Technical Analysis, supposed to be good Fundamentals, and some minor good news, I thought the market has rebounded. On top of that, the C levels, Directors, are buying the stock at the same time. That was Morgan Stanley at price of around USD 20.30 that time. Strongest support at USD 20 historically, so I thought. I gambled the market.
On Friday, the price bounced at USD 20 for a couple times (Just like BAC at USD 7 today) and I went in 50 Call Contracts with High Delta deep in the money. On Saturday, the downgrade of US Treasuries was released and confirmed by S&P. The stock gapped down the next day with news during the weekend and went straight down on Monday and Tuesday and never came back. I had traded with hope that USD 19.50 and 19.00 was a even strongest resistance, again so I thought. It had a small dead-cat-bounce, but my HOPE and ARROGANCE has caused me great misery. The stock then broke all Support Levels and the Dow Jones went all the way down to 10600 (10800 historically strongest resistance). I couldn't do anything but to only scream and cry, and cut loss at a huge loss when fear took over. In this very trade plus some minor bullish trades, I went deep in the shit, I've lost a total of close to XX,XXX in two days. Then only I realized that I was no difference than those going to Las Vegas or Genting. I have been crying over split milk until my nose bleed for the past two days and it will take me some time to recover. I saw the news of grown man crying on the streets, I'm no different.”
1. Don't Gamble the market
2. Trade at your comfortable levels
3. Don't be gung-ho, go with the flow of the market sentiment
4. Never trade in HOPE
5. Look at Pre-Markets and After-Markets
6. Monitor the Index Futures too, especially when you're in a position
7. News can be noise
8. Never assume
9. Be careful of announcements, especially by Obama and Ben. Their facial expression tell tales too, from the pictures
10. Don't be arrogant, be humble in the market, and in life, to the people around you
11. The market does not respect anyone
12. Cut Loss when things turn against you, CUT LOSS, NEVER HOPE
13. Again NEVER HOPE, because it will very quickly turn into PRAY.
14. Once Again, Never GAMBLE!
I did not follow rules; I gambled the market with the hope of making quick buck. It was purely my mistake. There is no one to blame, but myself. Please take the lesson in my mistake as your lesson. I pledge that I will never repeat such mistake again and I hope you guys learn from my mistake too and never make it your own.
There are many things in life that has shaped my character to be overconfident. I'm very disappointed with myself. I'm very sorry and shameful to tell you YouTubers this, but I swear that this painful experience will change me, in trading, and in life. I will work extra hard to recuperate my losses, one step at a time.
PS : Notice how my songs suddenly sound different? Well, emotions play a huge role in my styles being someone non-technical.
http://www.fulltimetraders.com (In Progress)