I broke so many rules on my very first trade and here is how it went down:

First, I entered late.  By this, I broke a couple of guidelines.  One is that I started looking mid morning, and found a stock that was up a few percent.  The other problem is that I did what many would call chasing because the stock had already had two or three up days when I went in long on the stock.  At least this stock has the potential to move on good news.

My next violation was not cutting my losses quickly.  Sadly, the stock flatlined for most of the day and then dropped a cent or two per share in the last few minutes of the day.  By the end of the day, I was down about $20.  Realistically, I should have sold and moved on, but I am doing this to learn, and I am not risking very much at all.  

Next violation:  I bought before an earnings report!  Yep, another major mistake. Don’t do this.  The earnings turned out to be pretty good in my opinion, because last year $GSAT lost nearly half a billion dollars and this year they are up about $75k.  This great jump, however, had almost no effect on the price of the stock, and $GSAT barely moved the following day.  Maybe this has something to do with it having a pretty large float, but what matters is that it did not move.  This was another chance to get out with a small loss, but I didn’t do that either.  So, I held over the weekend, and on Monday, watched it drag its feet again.  

$GSAT finally started to show some momentum and it passed my break even point, where I sold it a few cents on the up side.  I saw a red tick around lunch time, and that was enough to convince me to finally get out of this slow mover.  That was the last major violation - selling too soon.  Turns out, it would have made it to the twenty cents a share up side that I originally wanted if I had held until mid afternoon.  

So, now that the violations are out of the way,

Here is what I did right… 

First, I am doing this with the introductory free trading at E*Trade, so it is not costing me any fees.  Next, I used StocksToTrade (also currently free) to find the stock in the first place.  This is an awesome product.  Use it!  Next, I actually bought an earnings winner.  Yay for that.  But, the lesson here is to wait for the report and the conference call to be completed, and then see how the stock responds.  Finally, this last thing surprised me: for some reason, none of the ups and downs of the stock really made me all that emotional. I figured it would have, but it didn’t.  Bonus for having a decent mindset.

 

 

Thanks for reading.