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18 Feb

Learn From My Two Biggest Losses Of 2013

by

I’m a teacher of swing trading and I put real money on my real-time buy and sell alerts. The bull market we saw at the end of 2012 carried right over into 2013. As a result I’m trading a little more aggressively than I normally do, taking advantage of this run, averaging about 3-5 swing trades each week. At the start of every year my clients and I make a goal, in 2013 mine is to make $10,000 a month while teaching trading full-time. I have 26 wins and 10 losses so far this year for a realized profit of $43,364 winning 72% of the time. Yup, less than 2-months into 2013 and I’ve realized a 14% return on the portfolio.

Of my 10 losses so far in 2013, the 2 biggest were on NUGT which isn’t actually a stock but a leveraged exchange traded fund, 3x GDX. It’s very rare that I swing trade anything other than stocks but I thought had the bottom on gold and gold miners pegged twice and failed both times. The first loss was for -$11,400 (-11.45%) and the second loss was for -$7,900 or (-9.52%). Add those together and there’s -$19,300 in losses on NUGT in 2013. If you add up 10 other losses all on stocks it’s -$10,000, almost half the 2 NUGT losses.

Unlike a lot of newsletters out there, I keep a history of my trade alerts so clients can learn from them. That’s why I say Jason Bond Picks is a diary of a real trader. So as I reflect on my performance so far this year, it’s obvious I have a better handle on small cap stocks than I do on leveraged exchange traded funds. Additionally, my average loss on the 2 NUGT trades was -10.49%, the other 10 losses on small cap stocks was -1.86%. Clearly my stops on the 2 big NUGT losses were horrible and to be honest, embarrassing.

So here’s what I’ve learned. Clearly my handle on the gold and gold miners reversal isn’t as good as I thought it was and my stubborn attitude not stopping out sooner and taking my loss like my other trades -1.86% cost me an average of -8.63% more. The big percent losses were also on positions sizes much larger than I normally trade which as I write this makes me even more frustrated with myself. Had I cut both of those trades around -2% instead of around -10% I’d have roughly $16,000 more profit in my pocket adding to the $43,364 realized profit I’m up in 2013.

In summary, my handle on the gold and gold miner reversal through leveraged exchange traded funds like NUGT isn’t nearly as good as my handle on the direction of small cap stocks. In addition, going big on those trades without a tight stops like my other trades cost me -$19,300, roughly -$16,000 more than it should have. Moving forward I’ll probably stay away from leveraged exchange traded funds and I’ll definitely stop out with a more disciplined approach if I do take one.

I’m happy with my performance so far in 2013 with realized profit of $43,364, but there’s always room for improvement… clearly I’d rather be up $62,664 had I just steered clear of NUGT or about $60,000 if I’d just stopped out around -2%. I evaluate my performance at the end of each week, month and year followed by making necessary changes to my trading to maximize my return. Make sure you keep a trade log too, looking it over at least every month trying to find patterns of strength and weakness. Trust me, to win on Wall Street, it’s the little things that add up.

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9 Comments

  1. ScottGliosca

    Thanks for the post, and thanks for staying honest. A lot can be learned from this as the chat is always filled with how much everyone is winning, but people rarely post their losses. Stops can be frustrating when you think you nailed the set up perfect but the market disagrees.

    Reply
  2. Brian

    I hope MEET won’t be on this list!

    Reply
    • Jason Bond

      I made $4,400 on MEET Brian, it was alerted at $2.75 and sold above $3 when it didn’t break $3.20.

      Reply
  3. Brian

    Well, thought I would take my first chance as you said you were long on it…I guess I was buying when you were selling.

    Reply
    • Jason Bond

      Ya we put it on watch on 2/5 candle over candle, missed the first bounce on 2/6 which was an odd market order, bought the pullback on 2/13 at $2.75 looking for the $3.20 breakout but it pulled back. Up 16% I teach people not to let a winner become a loser and do the same myself so I stopped out at an average of $3.02. So I was long it, to answer your question… but I’m a swing trader which are 1-4 day holds, for me to let it ride it must be showing strength.

      Reply
  4. Brian

    I guess I figured if you sent notice to consider the stock, a notice would be sent if that changed…or is that not how this works? Do you provide buy…but not sell notifications in your service?

    Reply
    • Jason Bond

      Yes buy and sell alerts on all trades I make and then I teach about what goes right and wrong. With MEET I believe I’d mentioned just watch so we had something to discuss at the friends and family, obviously not much to discuss though, while a decent trade it didn’t come anywhere near my $3.50 – $3.80 goal so I got it wrong and today’s market drop certainly didn’t help the case.

      Reply
  5. Brian

    Yes…bad day. You did say watch…and that you did not care if people bought it. I took the chance…never bet more than I can lose. It did not hit my trailing stop today. Would you sell it…or hold it in my situation?

    Thanks for your time.

    Reply
    • Jason Bond

      Well I definitely own the fact that it didn’t perform well, trust me I was looking for bragging rights there and thought I had the squeeze pegged. It didn’t work out as well as I thought it would and that’s on me. Having said that, MEET is a good small cap and I’ve been trading it on and off for the last two years with success. They have earnings coming up soon and I don’t hold anything through earnings as a part of my system. I’ll definitely be jumping back in this trade once it curls, consolidates and heads back up but by rule I can’t tell you what to do sorry, big SEC violation there if I answer that question.

      Reply

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