Trading Discipline A Key To Success. Proof >> KGC

I sold my KGC shares at the open since I didnt get the jump I was looking for. Also I didnt want to hold anything over this weekend. KGC opened at $14.25 and I sold my 1000@ KGC at $14.29 bagging 400$ profit in 1 day. Turned out to be a pretty good trade since KGC dropped all the way to $13.54 an hour later. I was tempted to buy it back, but I got conservative here and wanted lower 13s to get it back again. Turns out it didnt go that lower and infact jumped right back up, eventually closing at $14.19. Missed an excellent opportunity to bang around 500-600$ gain.

However the key thing I learnt from this transaction is that I stayed disciplined.
  • Avoid holding over the weekend: I normally avoid holding anything over the weekend. This is because of alot of price movement in the stock market is driven by sentiments. It doesnt take long for sentiments to change in this crazy market. Weekend also gives investors/traders time to do more research and change their mind/position. Some big news over the weekend can dramatically change the direction of the market. Bear Sterns opening at $2/share was the worst one…..Thank god i wasnt trading it. Check FRE and FNM after hours with the news.
  • Being conservative is not a bad strategy in this market: Its better to make no money or less money than actually losing it. Losing money breaks your morale and sometimes makes you gamble bigger to get it all back. (Eventually digging a bigger hole for yourself)
  • Dont over-trade: Just because you made good money in a trade doesnt mean you can play crazy with your next trade. Overtrading means giving away free money to your broker. Overtrading means you are sooner or later going to go wrong and probably affect your morale.
  • Always have an exit strategy: Whenever you enter a trade make sure you have an exit strategy. What point you want to get out is very important to a trade. This keeps you disciplined and controls your greed.
  • Be flexible: If your game-plan didnt work as expected, be flexible to adapt to the situation. Dont be stubborn about it. Its better to take a small loss and move on than sit on a huge loss and bitch about it later…
Sticking to these rules and actually making 400$/day turned out to be sweet deal.