Forget Gordon Gecko. All that Wall Street stuff is so 1980's anyway. Greed isn't good! And today I reminded myself why. (Though if it wasn't for having to wear braces I guess I could live with the Porsche and enormous luxury loft conversion!)
Yes, I made a profit today. Another £132 added to the pot. A sum I'd have happily settled for at the start of the Twenty20 match between Warwickshire and Northamptonshire. But the fact is with only a few overs to go I was well over £300 in profit. Which became over £400 when I got greedy and waded in to a short price on Warks.
Short price lumping isn't something I'm against per se. In fact I do it quite often with the understanding that I'll bail from it if necessary. And it's one of the reasons I changed my money management rules for the cricket world cup recently. It can be a good way to add a few per cent to a green already made on an event. And if you pick the situations to lump on carefully can be a pretty low risk strategy.
That's where I went wrong today though. My £2k lump on Warwickshire at 1.02 (Yes, yes, I know) wasn't so much driven by my belief that if was a good price (given the state of the game it wasn't as we later saw) but because I had my eyes on total profit figures. Basically not only did I want to take my monthly profit over £4k, but also wanted to tip my total blog profit over the £28k mark. I like achieving landmarks and that extra £40 would have achieved both.
Well, I got my comeuppance. Because 1.02 was too short. And with a few big hitting overs towards the end of the Northants run chase the price was out to 1.15 which is where I dumped the trade, said goodbye to my "easy" extra £40 - and lost a further £260 of existing green to boot. Sure, when I placed the trade I knew I would still win on the match as I would simply bail if necessary while still in a profitable position. Which is exactly what I did.
That's not really the point though. Letting outside factors - Greed and an arbitrary landmark - take control led to a poor trading decision, my thinking 1.02 was a "sure thing" and lumping on when in fact it was a poor 1.02 to take given the state of the match. Trading decisions should be made on the relevant event-linked facts. Unlike today, nothing else should come into it. Of course, the decision whether to bail at 1.15, another poor price, is a separate issue. But I won't go into that here.
So, my reminder to myself today is Greed is not good. And thankfully, while lunch may well be for wimps, I'd like to think I enjoy mine too much to ever become too Gecko like. I've had a reminder, even warning, though. And it's been heeded.
3 comments:
"Stop going for the easy buck and start producing something with your life. Create, instead of living off the buying and selling of others."
O, yes, the little green greed monster. He is probably the biggest enemy of any trader/punter/gambler, whatever you want to call the breed.
From my experience, as as you've indicated, he typically pops onto the shoulder when you start looking at the day, month and overall figures. All innocently he just sits there and utters the phrase: Wouldn't it be great if...
I once read that the market should dictate the final result - as soon as we don't listen to this shrewd advice, we get bitten.
Can't argue with a word of that Jaco. Spot on.
Post a Comment