Greed and Fear

Thursday, September 17, 2009


Greed and Fear



I have been noting down on my emotions : When I was greedy, when and why? When I was in fear, when and why?



How I survived a nightmare(day-mare, actually)



ZiJin-cw : Yesterday, I queued for 0.148 and it was done. Shouldnt I be jumping for joy after TWICE it shot up above 0.14(my target price) to 0.144 and 0.142, only to see it pullback the next day to go below 0.130?! Should I be relieved that I could sell it at such a "HIGH" price as I saw it plummeted to a low of 0.07 last month?? I was not in joy after I sold it, as I m seeing more upside on it TODAY as gold reaching for 1020. Now, yesterday morning it was at 1005(and even went down to 990 level days ago!!) ... so, I do know it will jump, and placing a 25% increment from the previous closing price, I thought it wont be done(like I dont wish to sell? GREED in play) ... cool. It closed at 0.155. OUCH. Later I wont be surprise if it jumps up another 10-20% to 0.17 level, and breaching new high above 0.20 soon. SHOULDNT I BE in JOY? Hmmm ...



Now, for TWO times when it breached my target price at 0.140 ... I got GREEDY and did not sell it at 0.140(lack of discipline with GREED in play). But, both of the times, it dived below 0.130 the next few trading days. I was cursing myself for not being disciplined. I SHOULD HAVE SOLD IT AT 0.140, I said. As it reached 0.125 level(FEAR in play?), I was kicking myself(in my trading room ... without anyone know about it, and also I do not write about it. This is a confession of a novice trader!) ... and promised to sell it at 0.140 the next time. Yesterday, it breached 0.140 for the third time in as many weeks.



I bought ZiJin-cw at 0.142 with great confidence it will shoot up back to 0.20 level(it dived from 0.16+ to 0.14 level when I decided to buy into it). For first few days, it went up to 0.150. I started to feel confident. I even think of buying more?? GREED in PLAY. But, I did not as that was not in my trading plan. As China markets pullback, ZiJin started to show weakness and back to 0.140 level, and without much problem, going below 0.130 after a week or so!! I do not put a stop-loss, but thought of buying more at 0.120 level.



Yes, it reached 0.120 level ... I was in FEAR and was too stunned to execute my plan? Hello novice trader, you are supposed to follow your plans? I did not. It went back to 0.130 level ... then, HAI YAH, why I didnt buy at 0.120 as planned? It it going to shoot up 0.15 soon!! Yeah, right. Emotions in play ...



Funny, it dived below 0.120 level ... and I was watching it and braved myself : You better buy at 0.10 level or else I will slap you. PIAK. I bought more at 0.10, to avoid being slapped by myself.



FEARS? Wait till you see my face when it went below 0.10, and dived to 0.07 level. I will buy at 0.05 level, I mumbled. Yeah right ... when it really reached 0.05 level, we will be shivering??! I was holding on to 180k units averaging at around 0.12, so at 0.07 ... I m losing almost half of my values. With the expiry date shorten each day, the FEAR is very real. What should I do? As I searching for answers(like looking at my palm lines and the formation of stars above) ... ok, last plunge to 0.05 ... BUY!



It rebounded from 0.07 very quickly back to 0.10 level. PHEW!! What a relieve tho I was still down. As markets in HK recovering, gold price shooting higher to 980 level ... wow. Suddenly there is a great interest in ZiJin. It was shooting like 20% per day. Do the calculations : 0.070 to 0.100, the 0.120. That was just in a week!! It reached my average price. What a relief. Suddenly the FEAR disappear(very fast) and confidence is back. Ok ... I will be VERY glad to clear it at 0.140, I told myself.



Arrghh ... it did reach 0.14 ... ok, I think it will reach higher, say to 0.15?? Then, I started to write about it 2/3 weeks ago, exposing my rollercoaster ride with it. Well, it reached 0.140 TWICE but finally I sold it yesterday as it reached 0.140 again for the third time.



ZiJin breached HKD8 yesterday to close at 8.15, a level never expected in such a short period of time. I started to stalk ZiJin in Feb when it was at HKD3.50 level.



There are so much emotions involved that I was numbed. I m learning to ride on roller-coasters and to numb myself when I trade. But, frankly ... I dont like the emotions in play. I wish I m totally emotionless. Guess I just need to learn and experience more ... I m such a novice. HAHA.



I m trying to be a contrarian but due to lack of discipline, I have not really been doing that. I tend to 'follow the herd', and being slow, I will be slaughtered. The control of emotions is VERY essential and important. Move on after we sell(not looking back with regrets due to greed) ... and hold on after we bought it. Markets up and markets down ... it is the trend that we should TRY to follow. As the saying goes, market ALWAYS win. We buy, it goes down ... we sell, it shoots higher. It is wiser to be longer term investor rather than short-term trader if we could not contain our emotions.



NOTE : The above story is fictional as it is being used to illustrate FEAR and GREED in a novice trader like me and should not be taken seriously.

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