Yesterday ask Lion, "since when we stop to cut loss, if we apply cut loss, we still can reserve most of our money, and wait for other opportunity, and even can make money at this market." Lion's answer is great, "For me, I am investing, and not trading. If you are trading, you should apply cut loss, but for investing, you are buying the business. So if the price is cheap to you, buy it and hold it."
Am I trading, or am I investing? This make me think twice. All the while, I am trading US options, and certainly that is trading. And my experience is, "cut loss when the market against you". Do not let all your profit, which collect small small portion from many trade, lost on a single trade. I experience this before, earn 100% of my portfolio in one month, and lost them all in another month, including my principal.
That is options, but now i buying stock, marvelous, great stock before, before this 2008 crisis. And as state in my previous post, I jump in too early, and now experience 40% lost of my portfolio. I am not scare this time, not as previous when I buy options, because options have expire dates, stock do not. But my fearless come with one assumption, which is these finance giant won't collapse, won't bankrupt like Lehman. I really cannot imagine a world, where Citibank suddenly disappear. Hardly imagine right, but who knows, maybe this will happen, no people will predict the collapse of Lehman also. Quote from John Mccain, "We don't hide from history, we made history!" Yes, US always make history, goods and bads. If really Citi going to collapse, let me spend some money inside, joining this history moment.
Yes, now i switch from trading to investing, partly being force to. But deep inside my heart, I still prefer trading rather than investing. If I only stick to my plan of bear call spread, my portfolio could reach at least 200%. Until now, I earn 20% every month from bear call spread, but of course, these money lost while I buy other options. I should try to find a security, which can provide cheaper price for bear call spread trading. TD Ameritradde a bit expensive, when open position, already lost 1.5% + USD20, this is quite a big ammount, if my spread is only 6%, the transaction fees already chew up >25% of my profit.
Nothing can do now, because most of the money being used to buy those giant stock. Certainly, at this volatile market, open credit spread position is really risky. The index can climb and drop >5% per day easily. Open normal call or put options is more practical, RRR(Return/Risk Ratio) is higher.
Again, I prefer trading rather than investing.
1 comment:
i too prefer trading than investing,
because trading lets you make action every day , and you feel excited about it, while investing is a very boring game when u do your research, park your money there, and that's it. :P
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