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Your Biggest Investment Blunder!! & lessons learned!

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Hi Julia,

Most software has ATR as a standard indicator, it would be a poor program without it.

The concept is that if a share is fluctuating more than usual it is better to give it room to move.

If a share tightens it's fluctuations, as in a consolidation phase, we want the stop loss to tighten up a bit, so that if it moves down we hit our stop earlier.

I guess the most common would be the average ATR for the past 14 periods, so ATR(14) usually multiplied by about 2.5 to 4 then this amount is deducted off another piece of data

There a number of different things that people deduct it from, could be recent high or high close or a moving average.

Was a very popular stop loss during the tech boom.
 
Julia, here is the Wikipedia definition of ATR http://en.wikipedia.org/wiki/Average_True_Range
(NB I have added the bold font)

Average True Range (ATR) is a technical analysis indicator developed by J. Welles Wilder, based on trading ranges smoothed by an N-day exponential moving average.

The range of a day's trading is simply high − low. True range extends it to yesterday's closing price if that was outside today's range, ie.

true range = max(high,closeprev) − min(low,closeprev)
The average true range is then an N-day exponential moving average of the true range values.

Wilder recommended a 14-period smoothing. Note this is by his reckoning of EMA periods (see the EMA article on that), meaning an α=1/14.

The idea of ranges is that they show the commitment or enthusiasm of traders. Large or increasing ranges suggest traders prepared to continue to bid up or sell down a stock through the course of the day. Decreasing range suggests waning interest.
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Also, a link to Incredible Chart's "Indicators A-Z" on ATR: http://www.incrediblecharts.com/technical/average_true_range.htm
 
Biggest blunder (trading) - not having a system. Sure I did ok in the 90's but it was pure luck.

In my other business I don't seem to be able to put a foot wrong lately. My blunder in business was that, if someone wants to give you substantially more money for doing things a little differently don't fight it too much - adapt and get the best deal that you can!

Investing / trading lessons learned - trade with a system . I discovered that I trade much easier when I have a strategy I have coded into a mechanical system that I can backtest, forward test and basically overtest! If I can't test a strategy I won't trade it.

Stevo
 
barney said:
I reckon I've got most covered in the "dumb play" department. I've mentioned it a few times on different threads, but one more time will probably make others feel way less dumb than I was ......... in a nutshell, three bad trades on CDU at the height of the "panic" buying ............. I got caught "daytrading" (something I knew nothing about) when the Trading Halt hit. I had bought many thousands of CDU share with the intention of selling when in profit (to make up for a couple of thousand dollars I had lost the day before) Many days later I sold right near the bottom (thinking that I could lose everything if I held on any longer) And heres the best part. (At this point in time I am down about $60,000) I had one last crack to try and recoup something of my losses ......Guess what .........Lost another $8,000 ................... I reckon that will be hard to beat considering I was only a newbie with limited leveraged capital .............getting depressed thinking about it again :( Anyway I'm still learning and I havn't given up yet ............. Long hard road ahead ............ I deserve two of these!! :homer: :homer:
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Wow thats aweful barney :eek: I really feel for you there.. Id hate to lose that much money. You shouldnt put it all down to your dumbness... trading CDU at that time was purely gambling... anything could have happened... at that time no one knew how to rate the company.. it was all specualtion. Everyone knew the risks.. win big or lose big. You lost big... but imo it doesnt make u any worse than someone who bought at $2 and won big (with the same thought process of you).

The biggest lesson Im sure you would have learnt is evaluate your risk.. and buy/sell stocks based on your evaluation... ARE YOU prepared to lose 'x' amount of money with 'y' probability for the chance of making 'x' amount of money with 'y' probability? Think of taht deadly worst case scenario coz it sure as hell could happen. Dont buy stocks convincing yourself they HAVE to go up coz nothing is ever certain. And NEVER impulse buy to cover up a previous days losses.

Anyway I really hope all the best for you and your future trades.
 
Biggest Blunder: Not backing Makybe Diva in last year's Melbourne Cup :banghead:

Going to Derby Day, Melbourne Cup and Oaks day next week :)

I'll be the one in the black suit :eek: :)
 
My biggest f'up to date happened 3 weeks ago on sen. I was up around 4k on day trading with some large buyers coming out of no where ( me thinks this has something to do with whats happening now but wrong thread )and the stock heading into the 50's with ease. Any rate they came back a little and i bought 50000 @ 51. The next day they had dropped to 50 so i brought some more thinking great buying opp then they dropped to 49 and bought some more to average down. By the end of it i was holding 720000 units with an average price of around 48 and running out of time dumped the whole lot at 46 YOUCH. Great lesson dont average down and compound your losses and yes where was my stop call?
Im still holding 120000 @ 48 and although no one really knows, even if they do come out swinging after their suspension i doubt its going to cover what i lost! :banghead:
 
$350,000 of SEN.

Your nuts.
You must Have a $3.5 million Capital base.
 
170k in stock thereabouts which allows me to trade a further 170k plus another 50k credit on each 3 accounts. Yep it was absolute stupidity, i really thought i could by myself out of it but hey im learning!
 
constable said:
My biggest f'up to date happened 3 weeks ago on sen. I was up around 4k on day trading with some large buyers coming out of no where ( me thinks this has something to do with whats happening now but wrong thread )and the stock heading into the 50's with ease. Any rate they came back a little and i bought 50000 @ 51. The next day they had dropped to 50 so i brought some more thinking great buying opp then they dropped to 49 and bought some more to average down. By the end of it i was holding 720000 units with an average price of around 48 and running out of time dumped the whole lot at 46 YOUCH. Great lesson dont average down and compound your losses and yes where was my stop call?
Im still holding 120000 @ 48 and although no one really knows, even if they do come out swinging after their suspension i doubt its going to cover what i lost! :banghead:
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Great post Cons....do you see what Tech/A is alluding to? You risked a very high proportion of your capital. What would be really interesting is if you could relive the event for us, knowing what you have learned.

Heres hoping you get it all back soon....

I really miss Ballarat.

Cheers,
 
believe you me the last three weeks my trades have been considerably smaller plus the fact 2 of my broking a/cs had their credit facilities reduced (as a result of sen) but ive managed to claw back about 20% and should have money for xmas.
 
Well, we wait and see, but mine could constitute selling RIN in order to take the profit in case the whole takeover deal just dies. If it doesn't and the offer runs to $20 or more, then I will be less than happy. Probably a few others here as well.

Julia

PS But think of the smile on Realist's face!
 
Interesting that most people treat biggest blunder as most money lost, rather than mistake made! Some of us out here, I'm sure, made some big trading mistake and made a killer - but either don't think of it as a mistake or rationalise that it was a good buy..

My biggest blunder (in my short career) ended up making me money - I sold ZFX when it tanked following the zinc correction with the idea of buying it back later at a lower price - where I don't really know anything about short term trading. I ended up buying at a higher price than I sold for, but since I bought in for the same $ amount I had before it tanked I actually made more money!
 
Ok i said i would post my trading scorecard as my investment blunder, so here it is. Since i started trading 4 months ago i've recorded:

wins: 10

Losses: 23

B/E: 2

This is where i was a bit surprised:

Avg. Win$ - 215.43
Avg. Loss$ - 215.12

The good thing that has come out of this since my trding experience began, is that i'm letting the winners run now.

I think too that i plan the trade and trade the plan now, instead of going by impulsive emotion. I stick with the plan, with a good stop in place too.

Great learning experience so far.

Cheers,
 
i sold james hardie at 6.70

sold rinker at 12.80

both when i said to myself they were undervalued and long term holdsss...

i bouight cummins corp and they are on a trading halt... so that sucks..
 
First week of trading doesn't excuse the following.

GDN - I hate you. In a week where many made huge profits off this stock I lost. Twice. Enough said... lesson learned. :eek:

240
 
WPL was slipping and threatening to dive all day yesterday ,whilst @ $ 37.39'ish I decided to enter a line @ $37.25 (a big line,must I say) ,went to the toilet ,mobile rang whilst on the toilet ,scrambled like a wounded Italian football player to answer it.I was the wife "peel the spuds!".
Got back to the screen in record time ,so I thought!!!!! trade goes through with my pants at me ankles.GULP! have a look where they ended up today.....I'm the sort of trader that chases the stock down and runs around the neighbourhood thinking I'm dead smart and cocky!
The moral of the story is never leave the screen! and when you look at the screen make sure your pants are UP!,otherwise have a portable dunny in your office.
BTW this is just my latest comical event ,I have been trading for over 30 years ........its a case of you trade within your limits!
 
doctorj said:
Will you continue to trade next week?

What lesson did you learn?
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I will most definately continue.

I learned several things and to be honest I'm glad my first couple of trades were losses. As strange as it sounds, to me, it makes perfect sense. Like a kid reaching for a hot plate, I've been slightly burned. In the future when I sense the same heat I will run the other way.

I learned that trends work both ways. With or without reason.

I learned that everyone has an opinion but only mine is valid because at the end of the day it is my money on the line. I will listen and absorb but some of the noise is just that and needs to be ignored.

I haven't learned how to sleep easy yet but going to bed with an unrealised loss helped.

I learned that emotion should be checked at the door.

I also learned that patience in a fast moving market is worth more than any stock.

I learned not to trade with money I do not have. Day trading is not always done within the same day and commsec wants its money in 4 days. haha

The most important lesson that I learned (and I've gained a lot of encouragement from this) is that short term trading will be made up of many small losses, if you control yourself properly. This is fine because the small percantage of stocks that do go up in your favour will offset all the tiny losses and then some.
 
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