The 1 Share Tough Guy
As swing traders, we are given a gift and a curse, the gift is obvious, we are able to exploit charts for short term movements with very little risk, the curse is that we sometimes look too close and miss the bigger picture.
Looking back over some of my better trades this year (you will do this at the end of the lesson) and we will notice that most ended up higher than where we sold. This was the case more often in the trades where I was able to sell at least 10% higher. Sure at the time selling on the doji at highs after a solid run and the stock pulled back for a few days making the trade look perfect, then we forget about it.
After this 30% kick and the stock selling off the next day in FTNT, who wouldn’t feel like that was a great trade on 1% risk? Then we forget about the name and look back a month later…..
Then we feel like a big stupid idiot, our tough guy 30% chop, now looks like a baby trade when the stock is up 50% and showing no signs of stopping.
I’ve done this, you’ve done, anyone who makes money at trading has done this. I said make money, bc traders who lose money only buy and sell lower or short and cover higher.
Now why is this? Ego or greed, plausible? The real answer is a lack of patience, in a commission free world with impressively cool platforms, it’s never been more fun and easy to be impatient.
Would we rather be more profitable or have fun running around in circles, selling winners to go and try to find other winners?
Changing this is easy, we just need to start becoming 1 Share Tough Guy’s. Holding 1 share, or an inconsequential dollar amount of stock for you is the goal, your 1 share equivalent is going to be different then the next, so pick the share or dollar amount and stick to it with the goal of slowly increasing it over time. The goal is after you take your trade with the larger portion of your position, you set a breakeven stop for your tough guy position.
By setting the bar so low, you or I will not care about the 1 share, or the few hundred dollars in the name. The same as how easily you were able to start saving $5 a week and now you are most likely saving 50X that. If you are not saving weekly at this point, please slap yourself.
Now 1 share is boring and that’s the point, you won’t care giving 1 share back $10 to breakeven, and by not caring, you’ll be able to hold those winners much longer. In time after you (and I) consistently see those quick 10% winners turn into slower 50-100% winners, the overall lesson of patience will continue to get hammered into our skulls. We will then continue to be able to size up in these tough guy positions and really see how long it takes to hold a position long term.
So if you want to join me in being a 1 share tough guy, or your equivalent of 1 share, let’s see who can get to the first 100% winner first!
Go through your top 5 trades in the last 2 years and see where they are trading today!
Post your answers in the chat so we can all learn from them!