My main difficulties and mistakes in my trading journey- Part 2

Posting my own mistake is quite embarrassing. Thus, please subscribe my channel and give me a like to motivate me!

1. Never follow a trading plan.
This part is related to the difficulties #2 Have no confidence on themselves and #4 Take improper action in a trade.

When we buy a stock, we need to have a plan on it. Why you buy this stock? Is it based on fundamental or technical entry? What is your target price? What is your time-target? How much can we afford to lose for this trade?

Did I run? Nope. I was greedy and hope to ride more profit. I removed my profit target (1stred flag). I even removed my trailing stop loss (second red flag). Then, it plunged. My profit all gone and I suffered a loss. Did I get out of this position? No. I told myself this is a good stock to invest in long term (3rdred flag). Does this sound familiar to you? Now my trading plan changed from momentum play to investment play! Yes, it bounced back again but do you think I took the profit? You should be guessing right, I did not.

To be honest, it is still a good trade. But my original plan was to buy whenever there is a dip, as long as it is still below its intrinsic value. I sold it because of the big red candle, not because of the trading plan. The market then taught me a lesson by keep letting me to see FTNT hits new high again and again.

After these lessons, I know that I can be right for the direction and the right stock, but, if I could not control my emotion, greed or fear, I will still lose money. Discipline and follow the trading rule is uttermost important to protect us. Market maker and big players will always gyrase the market to milk from our retail investors. Many people lose in market because they lose confident and become impatience, and quit and never return again.

Use a quite from warren buffet: The stock market is a device for transferring money from the impatient to the patient.

To keep myself discipline and follow the trading rule, I told myself to bring me out from the comfort zone to create a community to discuss my investing plan and strategy, and even my trades on both telegram and YouTube. I am going to post my trades in my MooMoo moment too. This force me to follow my rule strictly as I am now showing my trades to everyone. I can feel the responsibility. Indeed, my investment portfolio of my challenge account is doing pretty well now. While I am happy I manage to provide some insight to my community friend and the subscribers, however, I should be the one to say thank you to all of you as you are keeping me discipline.

Option is a leveraged derivative. Many guru may tell you, you just need to pay a little, to own 100 shares of a stock! When it goes up, your profit will be also shooting to the sky.

While it is true that option trading or even option investing can generate lot of $$$, but it takes a lot of effort to understand how this works, because, you may also lose a fortune if do it wrongly.

A few years ago, I thought this is such a great method to use, as only required little money to earn so much money. I have done my technical analysis, I completed my fundamental analysis, crossed check with each other, and I thought I was ready to earn a fortune using the option strategy! Index is always going up in the long-term, good company is always going up in long term, right?

So, why buy stock? Just invest the stock with option!

Then I found that, the most difficult part is NOT the analysis, it is the emotional control. That time I was not good enough in managing emotion thus let the greed and fear dominated me. I failed to consistently take the profit earlier, or let the profit eaten and became a lost.

Let's see what had happened:

Because of the time decay, I literally still lost money if the stock dipped and rebounded. I even put a stop loss for my "investing strategy with option", that is strongly manipulated by the money maker. My stop was collected just in a few days.

What happened eventually? I lost money when the market trend was up, and I lost even more money when the market trend was down.

Funny right? No matter market up or down, I lost money. If the market consolidated, I still lost money because of the time-decay. Consequently, all options expired worthless. Not even single cents remained. Well, that time I did not know how to do option rolling, but I was pretty sure that I would lose more if I rolled it.

Consequently, my account was down almost 70% because of this. Once the option expired worthless, nothing left.

Lesson? Do not simply play option (or any instrument) that we do not know how it works. Option is one of the most complicated tools, as we need to understand the Greeks, premium, volatility and others.

Hope my video today could help you to avoid the mistakes that I have made, that in total cost me more than five figures. Learning from other mistakes are also one of the ways to profit from the market. What is your biggest mistakes that you have encountered and what have you learnt from the mistake? Share with us in the comment below so we can learn from each other.