New Equity Highs

New Equity Highs

By Chris Chillingworth

After yesterdays post where I saw my worst ever drawdown of 7% I can happily report that today my account saw new equity highs as it rose from £2218 to £2447, beating my previous equity high of £2404 only 5 days ago. How fast things can change when your starting out eh?

$MJN now down as low as $63.50

How come such volatility? It’s US earnings season of course, the market is all over the place I guess. My best performing stock was a recently opened SHORT position in $MJN which fell (after falling short on its earnings estimates) by -598 points. This is particularly interesting as after going short on this stock it initially didn’t want to play ball for the first few days as it rose up 24 points after getting in. Add that to the 8pt spread I had to pay to trade it and I was already 32pts down after day 2 of holding this SHORT. The following day (yesterday) it fell -30pts or so (as if anticipating today’s fall) before doing what it did today. At this point i’ll make a shout out to @jasonelse who raised my awareness of the stock. Me and Jason seem to have a similar trading style and found ourselves in similar positions such as SHORT $TJX and $DLTR. He mentioned $MJN being a good pick in the same sector as $DLTR and I gave it a look.

Having similar systems Jason knew it was a stock that would marry up to my strategy nicely and he was right. I went in SHORT and 3 days later it’s made me a lot of money. A great call by him and i’m very grateful that he took the time to give me a nudge on it.

And there’s a good point to be made here. I will always happily trade another traders suggestion or pick if it fits my system. Some traders i’ve noticed are keen to pick their own stocks. I know how they feel about this because I went through a very similar phase of this when I first started out. However, I soon realised the distinction between wanting to prove I was right, and wanting to make profit. I linked wanting to pick my own stocks with wanting to prove to the world I could pick good stocks. A sort of “told you so” strategy. An ego trip perhaps. “Look at me, I picked this stock and it won, i’m a trading genius yeah?”. That’s honestly how I felt when I first started. Looking back at myself last year I feel a bit of a fool on some of the things I posted on Twitter and on my old blog. I quickly learnt that there is nothing wrong with jumping on the bandwagon. As long as the trade fits your system, who cares who found it. These stocks are traded by millions everyday. There’s no exclusivity on them.

Fact is, some of my best trades have come from suggestions from other traders. @Vince_Stanzione recently commented on $MHP a few months ago. I liked the sound of his simple analysis on the stock, I married it up against my system and it fit like a glove. I bought it LONG in August and find myself up 350 points so far, still holding.

I realised that unless your a millionaire, no one cares whether you were right or wrong. What matters to me is profit. I can be right all day but if i’m not on the road to getting rich, then whose gonna care? Using other peoples picks doesn’t make me a bad trader. What’s the difference between using a program like Sharescope to filter out good stocks to trade and being recommended a stock by other traders. I believe there is no real difference when it comes down to making profit.

Ultimately YOU as a trader place the trades. YOU make that decision whether or not to go in or stay out. YOU are the one who has to stick to their system and overcome all the emotions involved. Those are just as important qualities to being a successful trader in my humble opinion.


Other stock performance

Looking at other stocks in my book, $ROST fell -35pts and my LONG position in Norwegian stock $STB.OL (Storebrand) rose +110pts. $FE (LONG) closed up +47, $PFE (LONG) closed up +30pts and $TJX (SHORT) closed down -64 pts.


Conclusion for today

It just goes to show that even when faced with a drawdown, stay positive, keep trading, dont start closing positions out of fear, because you never know whats right around the corner. In my case, an increase in equity which wiped out my previous few days losses and rose past my previous highest equity mark. I think staying positive and true to your course is the message/lesson here. What’s the point in having rules if your not going to use them. You might as well point and click.


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