Wow… it has already been half a year since I first started trading stocks! Part of me isn’t sure if I’m any better off than if I didn’t start in the first place. And the other part of me isn’t sure whether I’m any wiser of a stock trader.
All I know is that trading stocks in the short term (for profit) is not as easy as I thought it was going to be! Overall my experience has not gone how I imagined it would and my interest in trading stocks has been quite inconsistent.
Some days, or weeks, I don’t even want to think about trading stocks and other times I’m fairly into it.
Anyways, if you don’t remember how my trading progress has gone so far, then you might want to have a read of my previous articles. They are the lessons I learned in my first month of trading stocks and also my reflections on trading stocks at the 3 month mark. If not, some of my updates might not make sense to you.
Okay, let’s get into it!
My Fourth Month trading stocks
If you didn’t happen to read my previous articles, then you should at least know that I had started this period off with a bad taste in my mouth coming from the end of the previous one.
It was bad enough that I had begun to ponder if I even wanted to continue trading stocks in the short term (swing trading). I was debating whether I should switch my strategy to a “buy and hold for the long term”. The main reason for this was that I just didn’t seem to be getting the results that I was hoping for.
It also seemed like timing the market with swing trading was quite difficult to do. On top, there were a few things that I did not like about this strategy.
- The amount of time that I was investing into looking at stocks compared to the gains that I was getting.
- I didn’t feel like I was increasing my knowledge or bettering myself/skills by trading stocks.
- I didn’t see myself making a decent side income from doing this and especially not with the amount of money that I had invested.
- I felt that I could invest my time into building something more valuable and that had a greater chance of eventually bringing me a decent side income.
So I decided to just take a step back on trading stocks and limit the amount of time that I spent on it. I would just do it as a fun/hobby thing on the side, rather than focused on making side money from it.
This then allowed me to focus more on building something up over the long term like this website, but also on my programming skills. As I decided to continue with one of my previously uncompleted programming courses.
I felt this would be a better use of my time and I could watch my portfolio from the sidelines.
Now I have to admit that I came to these conclusions after the end of the first week in this period.
Okay, okay… you are probably wondering what happened to your portfolio David?
Well… it was nothing good!!
My unrealized earnings sank almost as badly as the previous week! This meant I was just shy of having -$500 in unrealized earnings.
Ouch, ouch, ouch!
You can probably understand why I decided to put trading stocks on the side. It was going pretty terribly!
Then a miracle happened in the second week!
My portfolio bounced back big time and I was sitting at -$80 in unrealized earnings. My hope was also restored and I had learned a valuable lesson from the previous week.
If a stock crashes, and it crashes hard, you are going to want to have a stop loss in place. Especially if you already had a 15 - 20% unrealized gain, otherwise it can evaporate in a matter of days.
While having a stop loss may work against you sometimes (think back to my first month trading), it can also save you from suffering deep losses in the face of a crash.
In the very next week, my unrealized earnings had gotten as “high” as -$26. If I had sold everything I would have had my account in the positive, since I had also closed a couple profitable trades.
It would have been a fresh start for me and in hindsight, something that I should have 100% done. Instead, I thought the upwards trend would keep going for the rest of the week.
Nope, nope! Not at all!
Instead, things took a turn for the worse. And by the end of the week, my account fell back down to almost -$400 in unrealized earnings!
Aaaaah. Sooo much turbulence!
These up/down phases were not very great for my mind either.
The last week of this month ended with more red! My account was down to -$640 in unrealized earnings! But I did have a few stop losses get triggered, so my actual earnings rose to almost $120 now.
I was really kicking myself in the butt for not putting stop losses on all of the stocks that I owned and for not closing all of my positions when I was at my “high”.
To me it was beginning to seem like I only knew how to lose money!
My Fifth Month
So did my next month go any better? Or did the red streaks keep continuing?
Generally, this month turned out to be another rollercoaster, but it was more in the downwards direction.
The first week ended with positive news. As there was a bit of a bounce back, so my account was just under -$500 in unrealized earnings.
I didn’t do much else with my account. I was mostly just waiting for a bottom and watching from the sidelines.
The next week came and it was back into the red. And of course my unrealized earning fell back down to -$610.
Thankfully this was all unrealized! I really didn’t have another choice but to hold and wait it out. Or as some other people would say…
If you are unaware, that is a meme from a time when someone accidentally misspelled the word hold!
And at this point I was beginning to wonder how low can the stocks I’m invested in get to. Was there even going to be a bottom? Or did I just buy a bunch of stocks sky high and at the peaks?
As I was looking over several stock charts, I noticed that either the stocks were going to rebound, or completely fall off a cliff. So the next few weeks were going to be interesting to observe.
Knowing that information, it was hard to hold and not cut my losses, but I had faith that things would rebound.
Though it wasn’t in the next week, as that was another red week. And now my unrealized earnings were down to -$740! The lowest level they have ever been!
I was very worried and concerned about my unrealized account balance. But since I decided to hold, I had to tough it out.
I was also thinking that if I’m given the chance to close out more positions, I will want to invest in some steady dividend paying stocks. However, I also had a hunch that things were going to go further down very soon.
Around this time I was also considering investing in crypto, because everything seemed to be going up over there. However, I didn’t because I felt like every random person was talking about investing in Bitcoin and that’s usually a bad sign. So I felt that I would have just lost money over there too if I had invested!
Thankfully, or luckily, the last week didn’t go down and it ended on a positive note. So my account bounced back up to -$545 in unrealized earnings.
I was probably thinking to myself something along the lines of…
Ughh… will my account ever be in the green again?
My Sixth Month
Nooooooooo! Nooooooo! My fear that several stocks I owned could fall off a cliff soon was coming true!
And it was around this moment in time that a friend had recommended I read One Up on Wall Street. I thought this was actually not a bad idea to learn from one of the best stock traders out there. Maybe I could instill some useful knowledge into my brain.
So I started reading that book and was thinking even less about my portfolio.
That was probably a good thing because at the end of the first week in this period, my unrealized earnings balance was at -$880!
Omg… it was almost down by 1 thousand dollars! What was I thinking in wanting to become a short term stock trader?
So you are probably curious as to where these losses were coming from?
Well several stocks that I owned were down in the range of 25-35%. Just some bad picks! I was also wondering how much lower could they possibly go?
The one plus side was that another one of my stop losses was triggered, so my earnings were up to around $190.
And just when I thought it couldn’t get any worse!
Oh gosh… I’ve crossed that threshold!
At the end of the next week, my unrealized earnings balance shot past 1K. I was down to -$1,150.
Aaaaaaaaaaaaaah. Why…. why!?!?! Why did I decide that I wanted to trade stocks in the short term!!
Surely… this was as bad as it was going to get! Right?
On a more positive note… I did have another stop loss get triggered, so my total earnings were just shy of $230.
Right around this point in time, I was strongly considering whether I should cut my losses on the stocks that have lost >40%. As I started fearing that they could end up losing 80-90% of their value. So at least I could save some of my money, be able to start over in rebuilding my portfolio and learn from my mistakes of not setting stop losses for every stock in my portfolio.
But these were just thoughts in my mind right now. I didn’t act upon them.
The next week came and my unrealized earnings sank to as low as -$1,400 or -$1,500! But thankfully the rest of the week was green, so it only went down slightly to -$1,234.
Annnnd finallllllly the next week went better and ended in the green.
So I had a small bounce back and my unrealized earnings were sitting at -$1,050. At this time, I was really mentally preparing myself to cut my losses and start over. However, actually cutting my losses was much more difficult to do.
In the end, I ended up just doing nothing! As my mind needed more time to prepare for taking some major losses.
And this brought me to the last week in this period!
It was a continuation from the previous week. Meaning my portfolio was trending upwards. So at least I ended the 6 month mark seeing a bit of green, but I was massively suffering from all the unrealized losses that I had in this period.
On the bright side, I wasn’t down more than 1K anymore! My unrealized earning balance was at -$935.
On the other hand, I did manage to close several more trades as well. Some were losers and others were winners, but it only brought my overall earnings down to about $220.
My overall state seemed not so bad when compared to a couple of weeks back.
A Summary of What I Learned in This Period
This was an interesting period for sure and one of the lessons I learned in my first month trading came back to bite me in this period. Seems that it can be both positive and negative, depending on the situation.
I also took a step back from trading and really focused on building out this website. I made a lot of progress on it and I’m happy that I made this choice. I also worked through the majority of a programming course that I hadn’t finished. Lastly, I also started reading Peter Lynch’s book, One up on Wall Street, and had learned a few insightful pieces of information.
The main takeaways that I learned in this period were:
It’s very difficult to hold onto stocks during long periods of red (losses) And it is equally as difficult to just get rid of them, because… what if they rebound? Stop losses are actually very useful if stocks crash or really start going down. Short term trading can be very stressful during periods of strong turbulence.
Moving forward, I’m very likely to sit back and focus more on other projects that I have going on. I will still pay attention to my portfolio and try to rebalance it with better stock picks.
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