Where I Came From And How I Got Here
Before joining the Ascending Trading community, all I knew about investing was the tried-and-true strategy of DCA and index funds. The memestock frenzy was what piqued my interest in trading. All this talk about short squeezes, options, and whatnot was so foreign to me, but seeing how much money people were making off of plays, I couldn’t help but learn more about trading. Like many, I stumbled upon the Valhalla discord when I saw Conqueror’s IRNT DD post on reddit. Initially, callouts from the Gods and the fervor in the trading floor drew me in, but it was the wealth of knowledge that I saw displayed in the channel that kept me here. After seeing the success that some had with options, I opened up a WeBull account with some play money and started perusing the Valhalla discord channel, looking through all the resources to see what I could learn.
The first video I watched was: Options Trading for Beginners (The ULTIMATE In-Depth Guide)
This gave me a good foundation on how options work and gave me the confidence to move forward with buying my first option!
The second video that I found very helpful was shared by Tedro: Money & Risk Management & Position Sizing Strategies To Protect Your Trading Account - YouTube
This helped put risk management in mind in every trade, but we’ll see later how my risk management strategy fell short and how I ended up violating my strategy.
After watching these two videos, I felt like I could tackle the world of options trading and went in one some small plays here and there. Initially, I only took small losses or small gains, as I was a bit unfamiliar with how options worked.
Once I gained more confidence, I decided to go in on two big plays: OCGN and ANY. It was thrilling seeing my profit grow so fast and these plays made me feel like I was some kind of trading prodigy. But, I quickly fell victim to the usual trading hazards that most traders fall into and things took a turn for the worse.
Greed And FOMO, The Newbie Trader Killers
The week following my OCGN and ANY plays, I read some DD that indicated that ANY might continue to run, and I FOMO’d back into ANY. This move blew up my portfolio and ANY went from being a very profitable ticker to being the biggest loss in my portfolio. Here are some big takeaways from my FOMO play and things you can learn from stupid mistake. :sad:
- Always have a plan. When I re-entered ANY, I didn’t have a good reason for doing so. I didn’t even time my entry, I just saw the ticker going up and didn’t want to miss out! Now don’t get me wrong, there’s nothing wrong with re-entering a ticker, but only if you have a good reason for doing so. I didn’t have a good reason for re-entering ANY, I WAS JUST STUPID AND FOMO’D BACK IN. Don’t be like me, have a good reason for entering ANY trade that you’re part of (see what I did there?). And for god’s sake, don’t FOMO into a play.
- In the same spirit as bullet #1, always have an exit strategy. Before you enter any trade, you should already know the criteria for which you will exit the trade. Have an idea of where you’d like to take profit and where you should cut losses before you even open a trade! Also, make sure you do your research and see if there are any future catalysts or events coming up that might make a ticker move up or down.
- Set your stop-losses. When I FOMO’d back into ANY, it was right before my physical therapy appointment. There was no way for me to check on my positions during my appointment and when I got back to my car to check on ANY, I saw that my positions were in the red. I could have prevented so much loss if I had just set a stop-loss. For example, if I set a stop-loss of 10%, I could have limited my losses to just 10%, but because I didn’t set a stop-loss, I ended up losing 50% on my position.
- Set a risk management strategy and stick to it. I violated my risk management strategy when I FOMO’d into ANY and I put more than 10% of my portfolio into one trade. Even if my strategy was terrible (10% is far too big of a position for any one trade), I still shouldn’t have violated it. My greed and FOMO caused me to deviate from my game plan and I paid for it hard! The fact is that a trade, no matter how much prep work you put into it, can always blow up. Even the Gods of Valhalla take losses sometimes! Setting a good risk management strategy and sticking to it can prevent you from blowing up your entire portfolio.
Here are some risk management rules that I have set for myself since my FOMO ANY play.
- No play can exceed 5% of my portfolio (I have a higher risk tolerance due to using play money). 5% is only reserved for non-volatile tickers such as AAPL or MSFT and during times when the market is more predictable. The riskier the play, the smaller the percentage for the play. For example, I might put in 0.5%-2% for a squeeze play depending on the risk involved. Or I might stick to 0.5%-1% plays during times of market volatility. Another good reason for position sizing is that your emotions will play a smaller role in how you play your positions. If the maximum amount of money your portfolio can lose from a play is in the single digits, you’re more likely to be disciplined in your trading. I had too much invested into ANY and that made it so much easier for me to make more mistakes.
- Diversify your portfolio and make sure that your portfolio consists of uncorrelated plays. You want to avoid having a single event (especially a black swan event) adversely affect a significant portion of your portfolio, so try to avoid doing something like only making tech stock plays or putting a significant portion of your money into a certain industry.
- NO FOMOING, EVER
- No DIAMOND HANDs or HODLing. Take those profits early! Those 10-20% gains will compound over time and it’s all about those consistent gains. Focus on minimizing losses, instead of maximizing gains.
Since my ANY plays, I’ve moved on to bot callout plays and almost exclusively day trading. My next post will cover how that’s been going and what new skills and strategies I’ve implemented! Thanks for reading and feel free to leave a comment!