This is gonna be cool.
Remember when I quit doing stocks last year after losing over $4,600? After that, I spent the rest of 2015 doing simulation trading with Thinkorswim and discovered that my problem was a lack of patience. 80% of the stocks I picked last year, whether simulated or not, went up from its buy price at some point. Instead of riding out the turbulence of the market, I would see the stock go down and sell immediately. The average amount of time I held a stock during real trades was just two days. Got it? Okay. Enter Disney.
Last year, the new Star Wars movie came out and it was huge. It made over 2 billion dollars and, last time I looked, was still making money. When I saw how much money it was making, I knew their 4th quarter earnings report (Feb. 10th) would be amazing. I wrote on this blog that I wasn’t going to do real trades again until June or July of this year. But then I thought, “How many times is a movie gonna make over 2 billion dollars?” Even if other divisions of Disney are down, the Star Wars profits should more than make up for it. The only negative thing was Disney’s three-month downward trend at the time, which was something I was sure a good earnings report would change. By the end of 2015, I knew I was gonna buy into Disney’s February earnings report and watched the market closely.
2016 started off historically bad for Wall Street. As oil prices plummeted, stocks took a nose dive with them. This was a huge contrast to the beginning of last year, when a drop in oil prices meant a rise in airlines stocks. I knew the market had to get used to seeing oil at or around $30 for me to have a chance in February. If the earnings report came out on the same day that oil prices slip, I could lose money. Other big companies had that happen to them. So I watched and waited until February. On the day before Disney’s earnings report, I bought 100 shares at $92.80. The next morning I woke up and felt good. Oil prices were up, stocks were up pre-market, and Disney had an amazing earnings report with record profits. Trading started at 9:30am and I finally looked at Disney’s price… it was down by over 3%.
What. The. Fuck! I had planned this trade PERFECTLY and I still lost money! I went to the gym that morning in a really bad mood. I said to myself that, once I’m done with my workout and return to the bank job, I have to sell DIS to stop my losses. When I got back to work I logged into Scottrade and got ready to sell. Then I remembered something. I remembered my lack of patience from last year. I remembered my 80% success. I remembered all the mistakes I’d made last year and decided not to sell. Whatever anxiety I was feeling, I simply turned off that emotion (like I did in last year’s disastrous WWE trade). When the day was over, I had lost over $350 and couldn’t care less. That was on February 10th. It’s now February 18th and the stock is above $96. I went from losing over $350 to making over $300. That’s a $600 swing, and proof that I had learned my lesson from last year.
Stock trading is not just about investing in a company. It’s really investing in one’s self. If I didn’t believe in my strategies, I would have taken my money out at the first sign of trouble like I did last year. With an 80% success rate at picking stocks, I’m done second-guessing myself. I don't just say I'm the greatest being that ever existed, I believe it. The only two bad stock picks I made last year were SeaDrill (from $15 a share to less than $2 right now) and Groupon (from $7 a share to $3). Holding those stocks would have been an absolute disaster. Right now I have a $94.50 stop on Disney, so I’m guaranteed to make at least $150 from the trade in case the market goes sour. But, with OPEC agreeing to freeze their oil output to raise oil prices again, there’s a fairly good chance that the DIS stock will go over 100 a share at least once between now and the end of March. So I may cancel the stop. Either way, this turned out to be a fantastic trade, and I’m looking forward to doing something awesome.
Once I sell Disney, I’m gonna take a tiny portion of that money and watch a Disney movie at the theater. Imagine that for a moment. Disney spends hundreds of millions of dollars to make a movie, and then pays me to go watch it! Or maybe I'll watch a non-Disney movie since I find their animated features about Africa without African people very annoying. But whatever movie I choose to watch, Disney pays the bill! HAHAHA!! That’s been my dream situation ever since I started trading media stocks. A fantastic trade indeed!
UPDATE: I decided not to cancel the stop and my trade completed this morning for a profit of $143 (I forgot about Scottrade's $7 trade fees). I didn't want to set a bad precedent of canceling stops. A win is a win. Besides, if the stock gets lower, I may trade it again.
P.S.: I find it a lot easier to turn off my emotions to a trade when the money isn't all that important. I have a little over $5,000 in my brokerage account ($10,000 with margin), and $35,000 in my bank account. If I should lose my entire $5,000 in the brokerage account, I’ll still have enough to buy a property from my bank account. It’s much easier to trade with money I don’t care about. This is a lesson I learned while trading with simulation money.
Remember when I quit doing stocks last year after losing over $4,600? After that, I spent the rest of 2015 doing simulation trading with Thinkorswim and discovered that my problem was a lack of patience. 80% of the stocks I picked last year, whether simulated or not, went up from its buy price at some point. Instead of riding out the turbulence of the market, I would see the stock go down and sell immediately. The average amount of time I held a stock during real trades was just two days. Got it? Okay. Enter Disney.
Last year, the new Star Wars movie came out and it was huge. It made over 2 billion dollars and, last time I looked, was still making money. When I saw how much money it was making, I knew their 4th quarter earnings report (Feb. 10th) would be amazing. I wrote on this blog that I wasn’t going to do real trades again until June or July of this year. But then I thought, “How many times is a movie gonna make over 2 billion dollars?” Even if other divisions of Disney are down, the Star Wars profits should more than make up for it. The only negative thing was Disney’s three-month downward trend at the time, which was something I was sure a good earnings report would change. By the end of 2015, I knew I was gonna buy into Disney’s February earnings report and watched the market closely.
2016 started off historically bad for Wall Street. As oil prices plummeted, stocks took a nose dive with them. This was a huge contrast to the beginning of last year, when a drop in oil prices meant a rise in airlines stocks. I knew the market had to get used to seeing oil at or around $30 for me to have a chance in February. If the earnings report came out on the same day that oil prices slip, I could lose money. Other big companies had that happen to them. So I watched and waited until February. On the day before Disney’s earnings report, I bought 100 shares at $92.80. The next morning I woke up and felt good. Oil prices were up, stocks were up pre-market, and Disney had an amazing earnings report with record profits. Trading started at 9:30am and I finally looked at Disney’s price… it was down by over 3%.
What. The. Fuck! I had planned this trade PERFECTLY and I still lost money! I went to the gym that morning in a really bad mood. I said to myself that, once I’m done with my workout and return to the bank job, I have to sell DIS to stop my losses. When I got back to work I logged into Scottrade and got ready to sell. Then I remembered something. I remembered my lack of patience from last year. I remembered my 80% success. I remembered all the mistakes I’d made last year and decided not to sell. Whatever anxiety I was feeling, I simply turned off that emotion (like I did in last year’s disastrous WWE trade). When the day was over, I had lost over $350 and couldn’t care less. That was on February 10th. It’s now February 18th and the stock is above $96. I went from losing over $350 to making over $300. That’s a $600 swing, and proof that I had learned my lesson from last year.
Stock trading is not just about investing in a company. It’s really investing in one’s self. If I didn’t believe in my strategies, I would have taken my money out at the first sign of trouble like I did last year. With an 80% success rate at picking stocks, I’m done second-guessing myself. I don't just say I'm the greatest being that ever existed, I believe it. The only two bad stock picks I made last year were SeaDrill (from $15 a share to less than $2 right now) and Groupon (from $7 a share to $3). Holding those stocks would have been an absolute disaster. Right now I have a $94.50 stop on Disney, so I’m guaranteed to make at least $150 from the trade in case the market goes sour. But, with OPEC agreeing to freeze their oil output to raise oil prices again, there’s a fairly good chance that the DIS stock will go over 100 a share at least once between now and the end of March. So I may cancel the stop. Either way, this turned out to be a fantastic trade, and I’m looking forward to doing something awesome.
Once I sell Disney, I’m gonna take a tiny portion of that money and watch a Disney movie at the theater. Imagine that for a moment. Disney spends hundreds of millions of dollars to make a movie, and then pays me to go watch it! Or maybe I'll watch a non-Disney movie since I find their animated features about Africa without African people very annoying. But whatever movie I choose to watch, Disney pays the bill! HAHAHA!! That’s been my dream situation ever since I started trading media stocks. A fantastic trade indeed!
UPDATE: I decided not to cancel the stop and my trade completed this morning for a profit of $143 (I forgot about Scottrade's $7 trade fees). I didn't want to set a bad precedent of canceling stops. A win is a win. Besides, if the stock gets lower, I may trade it again.
P.S.: I find it a lot easier to turn off my emotions to a trade when the money isn't all that important. I have a little over $5,000 in my brokerage account ($10,000 with margin), and $35,000 in my bank account. If I should lose my entire $5,000 in the brokerage account, I’ll still have enough to buy a property from my bank account. It’s much easier to trade with money I don’t care about. This is a lesson I learned while trading with simulation money.
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