Wednesday, August 29, 2007

It is funny to know how some people trade stocks

I have started trading from six months ago. Along my journey I had experienced many ups and downs, especially the worst times ever. As it happened so I didn’t give up. I kept firm faith in the market. It kicked again and again. It also gave good gains. But I did not book the profits. Nor am I greedy nor am I a long term investor. But its just because I did not want to do what I have done in the previous crash. Crash came again slow but longest crash. And boiled down my portfolio. I thought I need some more research. That is how I ended up reading an article by a young guy.

The days were bad at that time. 9/11/2002 approached and the next he was fresh and convinced that he can short sell without fear. He did so. A stock starting from Rs.240. He shorted 400 shares. It went down and down. He was doing intraday as shorting for delivery is not allowed by brokerage the firm. He was just happy than ever to see it go down and down. To 200 and still down to 180.

Then the stock was classified to be in the lower circuit filter as it has lost 25% in intraday basis. The trading on this particular stock (and maybe a few others also), was stopped for a short period to bring traders into conscious state. Just after the trading resumed on this particular stock, it started going up. Our guy wasn’t convinced or content to take profit. He thought he will wait a little time as it has to come down. But unfortunately it was going up and up and even crossed 240. I do not understand how he was watching it go up like that. He just do not have a plan for trading. Finally he bought back the shares at Rs.242per share and ended up losing 800 for that day. Had he booked profits at 180 he would have made Rs.24000 in a single day.

Whenever I get lazy to book profits even after my stocks reach their targets I remember this poor guy and sell the shares.

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