Listening To Others

It is often said that trading is a lonely business. That successful traders trade their ideas and do not trade other's. The truth is that most investors/traders do not want to do their own work. They want someone to tell them what to buy and when to sell. Look at all the services that cost money for advice and also the forums and chat sites (free advice). Actually, this blog is free advice in a way.

I believe to be a truly successful trader, one has to develop their own systems and trade for themselves creating their own trades. Witness this current trade I an still holding. Recently I purchased call options on Intercontinental Exchange (ICE). This is a stock that I have thought could do well over the next few months as it fights to buy the Board of Trade (BOT) with The Chicago Mercantile Exchange (CME) , with each company making counter bids.

When I entered this position, I was trading mostly based on some information I had heard from a well known and successful trader. I had not really investigated the charts or made any determinations based on the charts as I normally would do. The idea sounded reasonable and I ran with it. It wasn't a trade I had considered like I have done with the other trades I have discussed in this site. And sure enough, the markets have been roiling with fear and ICE has come crashing down. My position is heavily underwater by some 8.00 points or so. This is far from my normal stop loss procedure and risk consideration.

I simply have let this position run and forsaken all stop loss points. This position is still valuable from the standpoint of time remaining until expiration as the at-the-money options are priced at some $6.00 or thereabouts. This is not the first time I have been burned by listening to others. I have let myself become convinced that they knew better what was good for my money than I. That is a major sin in the world of investing and trading. You have to learn to fly with your OWN convictions and ideas. Depending on others for advice is setting yourself up for disaster. Letting others make your choices is so convenient because if things go wrong, you can always blame somebody else. The results in the end will most likely be failure.

I have decided that this position has been way over sold. I am expecting a fairly strong bounce in ICE before options expiration on July 20th. That gives me a good 3 weeks to let this position get back into profitable territory. However, this is not the way to become a successful trader. I am tempted to add to my position to lower my cost basis. But that is akin to betting good money on an already bad trade. That is another huge mistake that sinks to many traders. Yes, I have a major loss and it is my trade, and my responsibility. I made the mistake of blindly following some one's advice and it has thus far cost me dearly.

I plan to overcome this habit of listening to others. This is just another fault that I know I have to get past in order to continue to improve my trading. And that is why you always have the choice to be the trader you want to be. It takes realizing your mistakes and taking responsibility for the results. This is how a truly successful and prosperous trader is created. It does not happen overnight, but it can happen in time with persistence and the desire to learn from one's mishaps and errors.

Oh, by the way, where oh where have the Bulls gone? Yoohoo...are you there bully-bully? Just a few weeks ago, things were oh so rosy. What has happened? Maybe this time, the bargain hunting tactics just ain't gonna work so well. And just as I say that, no doubt there will be a blast off to new all time highs. Love it, really I do.