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Stock trading duds - lessons learned

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1 Stock trading duds - lessons learned on Thu Jun 04, 2015 2:18 pm

Just a thread to talk about the trades that went bad. Not so much the stocks that you bought that went down, because that is just part of doing business. But more the trades that went bad because of what you did.

For example (using aprpoximate numbers), I bought LF at 3.80. it dropped to 2.90 overnight based on the CEO's comments. The CEO was pumping the stock for months up until one day where he just made a huge negative speech. He was basically saying, "we are screwed" the day after he was saying "we are going to grow big time". Obvious fraud involved, but what did I do - I bought more at 2.90, then I bought again at 2.50, then again at 2.30. it kept dropping and I sold on a cycle up to 2.30 again. Lost about $5,000 total. And none of my buys were planned buys, they were just, it is going down, so I should probably buy again. I didn't cap what I was willing to spend on it, I just kept buying hoping for it to turn around.

1. At a minimum, what I should have done was trade a plan. Buy this many shares at such and such price, then buy again at this price, etc.

2. Better, I should have not continued to buy until his comments had the full effect (still happening) and just took my loss on the first buy.

I would have settled for doing option 1 (maybe a $3000 loss).

Option 2 would have been probably a $2000 loss. I'm not expecting that I would have took this route, but lessons to be learned here.

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