What’s the most you have ever lost in a single stock trade?

Mark C
Mark C
Sep 1, 2018 · 4 min read

There is one stock that I will never forget that has given me a big loss. That happens during my first year of learning to trade in stock. The lucky thing is that I manage to cut my losses, but not at the point where i should be cutting my losses. I cut it when I felt helpless and desperate.

Since then, I stopped trading for 3 months trying to figure out what was wrong. I even have the urge to stop trading forever, I just can’t take losses, I was taught such that everything must be done perfectly. But in the stock market, no such thing is certainty/perfect. We can never predict the stock market so you must accept the fact that you will always have losses in the stock market no matter if its trading or investing.

After stopped trading for 3 months and by reading books about trading every single day, I finally realized the mistake that I had been doing in the stock market. Before I list out the lists of mistakes, there are few phrase that every trader must always ingrain in their mindset.

  1. Trading is about taking small losses and making big profits. Never to have big losses.
  2. Trading is about managing your own anxieties
  3. You can never predict the stock market. It can be very expensive trying to convince the market that you are right.
  4. You can never be both investor and trader.
  5. Stock market is full of uncertainty, accept the fact.
  6. When you are right, hold on to the trend tightly. When you are wrong, cut your losses short immediate. No second thought.
  7. Market doesn’t care about your feeling. It won’t come to you with profits by sympathizing you.
  8. Don’t try to be smart to the market. The market is always way smarter than you. Just be emotionally discipline.

This are the lists of phrases you must always remember when you trade. All this phrase had helped me to become a better trader ever since. By always reminding yourself all the phrases, you will be much more discipline

As for the mistake that i had done. Here are the list.

1.) I thought i can predict the stock market correctly all the time. Turns out, all the correct prediction are based on pure luck.

2.) I thought trading is about Technical analysis, the ability to read the chart like an expert. I though Technical analysis can help to reduce risk. But, i was wrong, so wrong. When you talk about trading, you talk about Risk Management, Money Management, Emotional Discipline, Formulating a plan to buy/sell/stop-loss and Having a profitable strategy. I even thought I have a profitable strategy. But, I don’t.

3.) I have a mindset of integration between investor and trader. This is the biggest mistake in my trading career. When it is time to cut loss, I started to think like an investor. Price that goes down indicates bargain. I was unable to cut my losses short because I perceived that the stock has Fundamental and potential. But the price was going else direction. At stop-loss point, I add more into the stock. But, the stock just keep on going down. Lastly, I was desperate. I can no longer take the pain of seeing the losses, then i cut it. That was the biggest lost in my trading journey.

4.) When i perceived that the stock has fundamental, I started to think I can predict where the stock price will go. No one can ever predict the stock market. Even you have very much information about a stock on fundamental.

5.) I never employ risk management in my trading strategy. I should have trade by using position sizing. But, due to that i thought i can predict the market, I all-in my money because I think it is a sure thing. Turns out, I can’t predict anything.

6.) I was unable to cut my losses short when it hits my stop-loss point. If you can’t cut your losses short, don’t be in the market. Market is a place where it constantly pressuring your emotional state. Market doesn’t care about your feelings, it won’t come to you with profit by sympathizing you. So, you must manage yourself.

7.) I bought stock that has good fundamental but it is currently in downtrend. The downtrend momentum is also strong. So what when a stock has fundamental? Our purpose in the market is to earn money, not to be right about a stock’s fundamental.

8.) I buy stock with important money that were gonna used for paying mortgages. In this case, this trade not only risking my money, it is risking my life. Therefore, it is more emotionally pressuring. We should never trade money that is important.

9.) Never be in the market during the market hour. I was always in the market seeing all the stock’s overall performance. Greed, fear, expectation and impatience keeps on haunting me during the market hour. So, that is why you should always plan your buy/sell and stop-loss point before the market opens. In the market hour, you tend to make emotional decision which will lead to wrongful and regretful decision.

All this are the mistake that I had done during my first year of trading. I lost half of my portfolio. This lesson might be expensive, but now it helped me a lot. As for the main question, the most that i had done in a single trade is 30% of my total capital. Theoretically, we should only be risking 3% of our total capital. That is 10 times of the amount that we should be risking.

These lessons took me years to experience. The lesson cost my half of my portfolio. So, Why learn from your own mistake when can you learn from other’s mistake? It is much more wiser to learn from other’s mistake. If you wish to learn more about the correct approach of trading, you are very welcome to my website.

-> Klsetrader

Hope this helps.


Originally published at www.quora.com.

Mark C

Written by

Expert Stock Trader & Founder of KLSEtrader.com

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