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:
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-
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.
Well said Alex.
Make sure to follow him on Stocktwits & Twitter @tarhinitrade
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J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) and is a member of the Market Technicians Association. More
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