How to blow a perfectly good morning!  

 

As a relatively new trader (7 months into the Challenge), I feel like I'm beginning to get the hang of things, but it's important to highlight that we have rules for a reason, and they need to be followed.  

 

Two rules that have been beaten into our heads are:

 

1. Have a trading plan ahead of time.

2. Cut losses quickly.  

 

This morning the first ticker that came onto my screen was $LVTX.  I have a F/T job, so I try to get into my trade early to ensure I have the best entry.  $LVTX had a great catalyst, so I got in early.  

 

As can be seen in the attached picture, I had two good entries/exits, one at 7:13/7:42 and the other at 7:51/7:53, and probably could have/should have held straight through without the sell, but I got a little spooked by the price action.  

 

Still, I managed to bank $400.  Not bad for a newbie and P/T trader.  BUT, things went from good to bad, and then bad to worse!  

 

If you look at the top of the picture, you can see my comment on Profitly at 8:03 am, where I say "a possible reentry after 10am".  Did I follow my trade plan?  Nope.  Did it cost me?  Yup.  

 

You can see I got back into the ticker when I got into work at 8:34.  Bad entry and it immediately dropped 0.20, so I got out quick for a $100 loss.  Ouch, but I'm still up $300 on the stock.  This is where things went from bad to worse.  

 

For some ridiculous reason, I got back into the stock at 9:17 am - 13 minutes before the most volatile part of the day! - which was TOTALLY against my plan.  Making matters even worse, apparently I also had an open to buy at 2.25 that I must have forgotten about (we need to be meticulous!!!!).  Whoops!  

 

So, shortly after the open I find myself sitting on 2,000 shares at an average price of 2.35.  I wasn't panicking, as I felt confident that it was going to go red to green within minutes, and I would soon find myself sitting on a nice $500 - $1,000 profit.  

 

This is where I screwed myself by not following the 2nd rule.....cut losses quickly.  It was clear within the first 15 minutes that the stock was going to struggle and I should have gotten out in the 2.25 range for a $200 loss.  I wouldn't have been happy, but I would have still been up for the day.  

 

But nooooooooo.........I hold on all the way down to 2.02 and record a $660 loss on the trade.  So, in total, I was down $300 for the day on the ticker, when I could have just followed my trade plan and waited to after 10am to see if the stock was worth reentering.  

 

I hope by sharing this at least one new trader will understand how important it is to have a trade plan AND stick to it.  And, if the play isn't working, get out quickly!