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Friday, August 29, 2008

Your First Trade: Emotional Discipline

Quotations of the Day:

"Only when you combine sound intellectual with emotional discipline, you get rational behavior" - Warren Buffett

* * *

Challenge Accounts:

Investing Account Balance:
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.39

Personal Trading Thoughts: On follow through to higher prices, might look for some short swing trades ...

Personal Investing Thoughts:
My DRIP remains on for all of my stocks. Now for a while, I've been saying: "I also have my eye on a few stocks for my long term investment portfolio.". I think I'm going to create a sidebar to the right here at my blog - with my "Long-Term Investing Stocks Watchlist". But for now? Well, as I've been saying: I have in mind that there are signs of weakness in the midst of this relief rally. In addition, September is a month of extreme seasonal weakness. Therefore, I will wait. Sometimes, the best thing you can do with investing, is know when to just wait.

But let's be clear. Seasonals only point to a tendency. Not an absolute rule. Last September, we rallied through the whole month. We'll see.

Some time ago, I had a series on "How to Begin". We discussed getting started with Investing, rather than trading. Then we discussed your First Investment as to the mechanics. Then the First Investment, as to the emotions. Then we discussed the mechanics to your First Trade. Now let's discuss emotional discipline with your First Trade. (video included)

Tomorrow, is the "Week in Review" ...

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Challenge Project Account Balances and
Money Management Numbers:

Investing Account Balance:
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.39

Total Trades: 6
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $56.63
Average Loss: $74.27
Accuracy Rate: 33%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $53.84

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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