Chello to the great community of Valhalla. I just wanted to share with you what I have learned as have been trading both before and after I joined this server. These are some things that I have come to realize based off my own dumb dick mistakes and others I have witnessed as well. I hope you enjoy and hopefully take something away from it.
RISK MANAGEMENT
I know we all get excited when we see a call out or even just a mention of a potential play. We immediately reflect back to IRNT or ATER (pre share dilution…fuck), and think of those glorious run ups and the spoils of victory. You think “alright this is it I’m going to be a millionaire”. You immediately check the options chain. You see those juicy OTM calls with high OI that .02 a piece. You say to yourself “I can put 2k into this that’s 1000 calls. If these calls run to 10 that’s 1 million dollars!!!”.
Pump the breaks champ.
This is the kind of mindset that loses money.
Sure if you already have tons of money and 5k is a drop in the bucket then that’s fine. It’s all about the amount of money you’re willing to part with. If you’re fucking sweating balls on every play you make, odds are you’ve thrown in way too much money.
Keep it simple. Start with smaller plays. Dip your toes in the water instead of diving head first off the high dive at the community pool because, more often than not, there’s rocks and broken glass at the bottom. Over leveraging your position is one of the biggest mistakes you can make. I have and it was a very expensive lesson. Don’t think of the “what if’s” or “I could make x amount” that’s bullshit. Be smart and don’t over expose yourself by taking unnecessary risks.
KNOW WHEN TO TAKE THE W (OR THE L)
So you’ve found yourself in a play that starts to take off. You start dreaming of your new Lambo (I know that’s popular with a lot of people. I don’t know why I’d rather buy a house personally, but each their own). You watch it run and the unrealized gains start to accumulate. First things first that’s what needs to stick in your mind. They are UNREALIZED gains, aka that money isn’t yours until you sell. You keep watching it grow and think “I’m making so much money”. Well in order to get that money you need to exit the trade, but you get greedy and think it’s going to keep going and I’m going to be filthy rich diving in a pool of gold coins like Scrooge McDuck. Sure there’s actually no way of knowing how much a play will really run (see DWAC. I didn’t touch it when I saw it was at 100%. I said no thank you and it continued to run up to $175 over the next day and a half). The point is that there’s no telling when those unrealized gains could become unrealized losses. The stock can flip a switch just like that and come crashing down crushing your gains and probably your soul. If you’re up 1000% on calls and not taking profit you’re a damn looney tune. Take the W while it’s a W. Don’t get caught up hoping for more when you’ve got solid profit right in front of those greedy little eyes.
Now let’s come full circle. You get in a play and it doesn’t go the way you anticipated it starts dropping and you start to see that bright red color like the poison fucking apple from snow white. Yeah it’s a big time bummer. But wait there’s hope. “Oh yeah this could turn around it’s a solid play. I’m not worried”. Then it starts to plummet even more. If you’re still thinking that sentence above it’s due to one of three things. 1. You know something every one else who’s selling doesn’t. 2. You’ve got balls (or vaginas) of steel. 3. You’re addicted to hopium and need to check-in to your local rehab facility. There is a time to hold, but there’s also a time to take the L and move on. There’s no shame in admitting defeat and cutting losses. It’s better to lose half of your investment instead of all of it. Sure it could go up as soon as you sell, but that’s part of it. Shit happens. Work on your charting skills so you can use sound judgement of when to stay in and when to jump ship just as fast as you’re little fingers can click “sell to close”.
Moral of the story: hopefully you can take the W, but know when to take the L.
DON’T FOMO PERIOD.
This strategy is pretty basic. If you see a stock that has run up 50-100% please don’t buy it. Sure there are anomalies. As I mentioned earlier about DWAC was up 100% and still continued to shatter Earth’s upper atmosphere and proceed far beyond the moon. I didn’t touch it because the odds of something running even harder after it already running 100% are astronomical. I don’t give a flying floopty doo that I missed out on massive profits because on almost any other circumstance I probably would’ve been right to not touch it. Stocks that run that fast usually come crashing back down to earth then drill straight to it’s core. Even if it’s being hyped up, tune out the noise, think with a level head and repeat this phrase “there will always be another play”. That’s the truth there will always be another one. Big deal you missed out on one. You didn’t lose any money count that as a win.
MARGINAL GAINS
I think this one might be the hardest for a lot of people to grasp, especially those new to day trading, and really those coming off a huge win. The stock market has made money seem less valuable due to the fact that sometimes you can make your entire months paycheck in one trade. Everyone wants to get rich quick. It’s a fact. I know I would love to. But these homerun trades aren’t the way to do that. Sure there will be some and it will provide awesome gains, but not all plays are homeruns. Sometimes you’ve just gotta get that base hit. Collecting marginal gains is how to make money in the stock market. For those of you who don’t know what I mean by marginal gains, it’s relatively small amounts of money that add up over time. If you have a job, try comparing what you make in the market to what you make at your job. For example if you make $25 an hour, a full 8hr day would be $200. If you made $200 in the market in one day and find yourself saying “I only made $200 today” and that’s how much you make at your regular job you really need to rethink your concept of money. You just made $200 sitting on your ass watching charts and clicking buttons. No boss breathing down your neck, no filling out TPS reports, no bullshit. You made that on your own without having to deal with any of that poppycock. We all make different amounts of money $200 was just an example (FYI $200 a day is 52k a year to put that in perspective). Just try to realize the actual value of the money you are making and don’t try to swing for the fences every time. Make reasonable trades. Collecting smaller profits will add up in the long run.
One last thing… DON’T BITCH ABOUT A PLAY YOU MISSED OUT ON.
Get over it. It’s whiny baby googoo gaga nonsense that no one wants to hear. Remove your fingers from the keyboard and go watch Titanic or A Walk to Remember, have a good cry and move past it. Like I’ve said before there will always be another play. Don’t bitch and moan about missing out, be patient and wait for the next play to come.
Hope you enjoyed. That’s all.
Puka out.
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