Reviewing Old Charts (AKA… "I can't believe I held the trade past that stop loss")
I highly recommend keeping ALL your old trading charts and journal notes.
They're great to review each now and then.
Not only do they offer educational value but they also offer a source of motivation in allowing you to see the incredible progress you've made, as well as a source of amusement at how you could have been so naive. 🙂
I would have bet good money on the fact that I'd NEVER consciously made a decision to hold a trade beyond the initial stop loss. I certainly don't ever remember doing so; and was aware of the concept of risk management at the start of trading as it's a fundamental part of a prior career.
And so, on Tuesday as I was flicking through some old folders of trade data and chart printouts, I was incredibly surprised to find a trade which I held past the stop.
It was early 2003 and I was trading Aussie stocks. In this case it was Croesus Mining (CRS). The strategy at the time was one of identifying a strongly trending market and buying after a pullback followed by evidence of continuation. I was operating from the LONG side only, as do most stock traders. This may have been a good idea had the market as a whole been trending upwards, but early 2003 was the latter stages of the several year bear market. As such, the strategy produced a disappointing mix of winners and losers for approximate breakeven results overall. Perhaps this would have come good if I'd continued into the following several years of bull market; but that wasn't to be. In the months following this trade I made the transition to options in order to allow easier access to both long and short directional plays. This also involved a variation in strategy.
Here's the CRS trade (Yeah, I really did use line charts at this time! I didn't buy my first "real" trading platform till mid 2003.)
(Click on the image if you wish to open a larger copy in your browser window)