I WAS WRONG

• Posted by JC Parets
• on September 14th, 2012

Today’s guest post comes to us from Alex Tarhini, a young trader that I’m proud to say I work with every day. And by trader, I mean analyst, strategist, tech superstar, portfolio manager and good friend. I couldn’t have written this blog post below any better. So I didn’t. He tells it like is:

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I WAS WRONG!

See how easy that was? Apple just made a new high, and our trade idea didn’t work out. Of course one part did of it did, the stop loss. It was a simple trade where we knew we’d be wrong quickly but had a very good risk : reward scenario. Typically we want even more “check marks” in our favor to make it higher probability, but so what? Make the position smaller. Cut it off at the stop. Next trade.

The lesson here is that you need to be flexible. We were calling for a mean reversion back towards the 100 -200 day moving average. And so came out the AWNGDGS (Apple-will-never-go-down-goon-squad). The comment section had every possible excuse of why the stock wouldn’t trade down. This same crew was around when we said the dollar just faked out the entire market, the euro was about to squeeze, oil was heading higher when we were in DEFLATION NATION, and those June prints in the market were likely to be the low of that correction.

The point is that everyone gets trades right and wrong. What this entire game boils down to is if you are willing to admit it when you’re on the wrong side and sticking to the trade when you’re right. That’s it. Apple stock doesn’t care about you or me, so I don’t care about it. If we get another (hopefully stronger) setup in the name, maybe we will take it, or maybe we will get long. It doesn’t matter what side as long as we have our set up.

Never get married to a position, a theme, or a name. History says you’ll be wrong until you can’t handle how bad you’re wrong. So stick with discipline and be wrong small.

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Well said Alex.

Make sure to follow him on Stocktwits & Twitter @tarhinitrade

Tags: $AAPL $FXE $EURUSD $UUP

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