As some of you may know, I'm a huge fan of Jesse Livermore. Well, maybe not the person, but I enjoy reading Reminiscences of a Stock Operator. It might sound silly but I constantly re-read the book to see if there are new lessons to learn.
With this, I would like to talk about finding our own ways to trade. Looking back at how I traded in 2022, I felt that I had to develop my own trading/investment style.
I also saw an article today that Warren Buffet had sold more of his $BYD Co., Ltd.(BYDDY)$ shares and increased on TSMC. It went on to analyse why he did it. While I thought the article was quite detailed, I often wonder whether it is true. But the truth of the matter is we will never know why Warren Buffet did it. It could be part of his routine way to trade or he had analysed some data which caused some concern. Whatever it is, I feel that it is important to have our own way to trade and not emulate "Gurus". I mean, even Warren Buffet loses money right? So while I can't customise your trading method, I could propose some ways not to lose money too easily:
Don't let sudden needs affect stock decisions
In Reminiscences of a Stock Operator, it highlights how Jesse Livermore believes that in trading (I think this can be applied to investing), one should not invest because he feels a "sudden need" to make money in the stock market. Trading and investing takes time, as one has to analyse the behaviours and rationale of stock movements. Otherwise, he is merely speculating.
For me, I believe the same as a stock takes time, not only to grow, but prior to that, one needs to study it and analyse it. I'm not pro and there have been times where I just bought a stock when I see it rise. This has exposed me to much risk and losses. It is also important, as Jesse Livermore highlighted, not to invest because of sudden needs, which he highlighted a case of wanting to buy a very desired mink coat which traders lost money over.
Analyse Mistakes
Jesse Livermore was a firm believer that one should learn from mistakes as much as successes. After all, these are "lagging indicators" which show, quantitatively whether your stock decisions are correct.
I've taken this lesson to heart and have learnt to see losses to learn. While I am almost always filled with regret, I tell myself to look past the emotional baggage and think about how I can improve. This thought, to treat losses as lessons, helps me to continuously improve my style of trading. One of the biggest lessons I've learnt is about having patience to wait for the right price to enter and right price to buy.
Have your own plan
At the end of the day, one should know why he chose to invest or sell away a certain stock. Whatever the reason, he should be able to know best himself. This is why I do not advocate following gurus because if you buy based on their actions, you would probably have to sell based on their actions. By the time you do it, it is definitely too late. Own your decisions, own your plan.
For me, I am still customising the way I trade to suit my lifestyle and habits. One thing I've noticed is that I tend to monitor the stocks too often and often make decisions on impulse. This is something I'm still trying to change.
Conclusion
So ... There you have it. My sharing for today. I hope it helps you develop your own trading plan. Feel free to share yours!
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