RSSArchive for February, 2007

Learning From Trading Mistakes

February 7, 2007 at 10:15 am

Bob trades online so his dumb mistakes remain anonymous.

While I’m not a backtester, I do believe that we can learn a lot as traders by reviewing our trades of the past. After all, if we can’t learn from our mistakes, how can we learn at all?

The member area of has a feature called “Trade of the Week”. It’s a useful area that a lot of members comment on due to the lessons taught there. The T.O.W. is a look back at a trade I took each week and how it turned out. Some of them work beautifully and I get to brag a little, but the ones that we all learn from the most (myself included) are the losing trades which are dissected after the fact.

JAH is one trade I recently featured, which was a channeling stock I took for a short sale at an area of resistance. My stop loss level was close by and the stock had bounced on diminishing volume right up to the upper channel line. I went short, but the stock soon after broke above the trend line, triggering my buy stop to take me out of the trade for a small loss.

After examining the trade closely, I determined that if I were given the same setup again, I’d trade it again the same way. I just like these setups because in every case my risk is quantified with a good potential reward, and that’s the cornerstone of how I trade. However, in this case I was objective and this was one trade in which my timing was simply off. Sometimes the lessons are minor, but being willing to take something away from a closed trade is the mentality we need.

It always surprises me how even selecting just one trade per week to examine more closely helps me learn and apply that lesson better going forward. Over the course of a year, I end up being a lot smarter as a trader.

What are you doing to learn from your trading mistakes? In my next post, I’ll show you a great way to learn from your past trades which is so simple you won’t believe it.

Until then, trade well!

Jeff White
President, The Stock Bandit, Inc.

[tags]Stock Market, Trading Profits, Profit Targets, Stock Trading[/tags]

Proper Positioning for Traders

February 7, 2007 at 9:26 am

Toddo wrote a great article over at MarketWatch that I highly recommend reading. His 5 points of proactive thoughts on how to position yourself properly in today’s market is a quick read that we all stand to benefit from. Check it out, even if you only skim!

Jeff White
President, The Stock Bandit, Inc.

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]

Realities of Trading

February 6, 2007 at 12:07 am

Hope your trading is off to a good start this week!

Wanted to give you a heads-up on this week’s free newsletter over at for my thoughts on 3 very basic but important realities of trading. I feel strongly that the acceptance of these principles can not only smooth out the equity curve of any trader, but also the psychological impact which trading can have at times.

And by the way, you can sign up for the free newsletter on the Free Newsletter page at An opt-in form is provided at the top of the page which puts you in full control of your email subscription at all times.

Trade well this week,

Jeff White
President, The Stock Bandit, Inc.

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]

Trading Intentions vs. Trading Actions

February 1, 2007 at 9:46 am

We’re all weak from time to time! Even the most disciplined suffer from moments of weakness. But, it’s how we learn from those moments that will determine our growth.

Case in point: The other day I was heating up some leftovers from Macaroni Grill. It wasn’t enough for 2 servings, but it was more than 1 serving and I knew it. I just decided to heat it all up, intending to eat what I wanted and leave the rest. Yeah, right!

Next thing I know, I’m down to the last few bites from what was originally a huge plate of food! What happened? I love to eat good food but I’m no Kobayashi! I surprised myself with what I put away, but it’s easy to see how it happened. When I loaded up the plate to begin with, I left the door of possibility wide open.

They say if you make decisions ahead of time, that once it comes time to make a critical choice you will make the right move. I failed to do that with my Macaroni Grill leftovers, and you know where I’m going with this — Trading!

I’ve done it too many times and the odds are that you’re familiar with it too. That trade you never intended to let get away from you just somehow managed to get too big. What started out as a 2 or 3% loser just seemed to snowball and before you blinked you were staring at a 15% loss. Ouch!

Bad News First

The bad news is that as humans, we’re prone to mistakes and that means repeat offenses. We might not have it within ourselves to keep a mental stop and act on it when we should. Blame it on not paying attention, blame it on a slippery market maker, you can even Blame it on Mexico if you need a reason, but the truth is that failing to put our original intentions into an actionable plan is what can make a bad trade even worse.

Preventing Pain

You aren’t alone, every one of us have let trades slip away when we shouldn’t have. The good news is that it’s fixable, and that means it can be avoided (unless the stock gaps big against you). It’s so simple, but yet easy to forget or ignore. Don’t fall into that trap.

It’s your money, so be vigilant! Set your stop loss as soon as you get filled on your entry, and trail it higher as the trade progresses so that you can let your profits run. Personally I do this with conditional orders through CyberTrader because they let me specify exactly what needs to happen to trigger an exit, but even a plain-Jane stop loss will do the job better than a mental stop, so use whatever tools you have at your disposal and turn your trading intentions into actions!

Jeff White
President, The Stock Bandit, Inc.

[tags]Stock Market, Stock Trading, Day Trading[/tags]