Tales of a Beginner Trader
I am sure there are many of you out there just starting their endeavours into trading or thinking to do so. This is why I wish to share some invaluable experiences with you to help you become a better trader.
Here is a list of three things that happened to me, that helped make me a better trader.
I cannot stress enough how important patience is when trading. There have been times where patience has saved me and also left me a few pounds short.
In March 2012 I decided to buy some Apple shares obviously highly subsidised on CMC markets. I had a good feeling about Apple releasing the new iPad and their quarterly earnings report, I thought I could capitalise on these events. So full of confidence I put £1000 into my account and obtained the shares. It was all going well at the start I was up £130 pounds within days and I couldn’t have been happier. However it was not to last, the new iPad was announced and shares plummeted, it was not what investors were hoping for and before you know it I was down £700 and at the brink of losing everything. When it gets that bad a normal reaction would be to just pull out with whatever funds you have left, but I noticed that the prices fell far to quickly it was too bullish if one can even say that. Yes my heart sank as I saw the losses I was making but I had patience. In that moment people were selling their shares, but it seemed towards the Q2 earnings report there would be a correction due to the nature of Apples year on year sales growth, and as predicated the prices came back up again and shot up even more once Apple announced their earning and I made cool £350 in 15 seconds.
The point here is that if you have a plan and you see abnormal behaviour don’t get scared or impatient as you could lose more in the long run.
Trends are so important and I’m sure you have heard this or read this before, but they are key.
In October 2012 I felt more experienced in trading, and wanted to actually have shares of my own without having any assistance from CMC. So I put in £60 with the intention of buying Activision stock as I noticed a trend over the past few years, as soon as the popular video game Call of Duty is released shares spike and then carry on growing throughout the year steadily. Which is to be expected given that it brings in over $1 billion in sales.
So its a week before the release of the new Call of Duty, and I’m feeling confident and I buy a few shares for just under £60 at $11.10/share. Then over the next few days things did not go as planned the price dropped to about $10.55 and hovered around that mark. Instead of relying on past trends and statistics I opted out and left only losing £5. The annoying part was, that a week later the price of the stock had gone past where I initially bought it and carried on going and If I had stayed with my decision I would have doubled my investment within a year.
Moral of the story is stick to repeating trends as they usually repeat.
You may not think that this is important or that there are more important things, but you couldn’t be more wrong and I will tell you why.
There have been a few times since I have started trading where I have not kept up to date with the news and I have lost out. Back in early 2012 I also decided to invest in some Sony shares using the Plus 500 platform, as they were going to release their new system at the time the PS Vita. As usual I was off to flying start, I was up £100 in the first few days and all was well. However there was some bad news regarding Sony at the time, which caused a large drop in the share price and the Vita hadn’t even been released yet. Fortunately I pulled out before it got worse and ended up with a profit of only £5. It was a great shame because I could have taken my profit when I was up a £100 once the news was published, and then gone short on the Sony stock and joined the downward trend that followed, and then gone long again once the dust had settled.
The Key thing to take away here is that for every trade you make always be as up to date as you can on the news, whether its economic forecasts, changes in employment rates or general news about the company its all going to be vital to the decisions you make.
So if you are thinking to dive into trading or already have, remember these 3 tips, be patient and cool headed if you see things that don’t fit the expected trend and there has been no reason for it via news and so on don’t panic. If you have done your research and you have firm plan stick to it, and whatever you trade keep that news ticker up to date all the time, it can make or break your position at times.