Risk appetite is a function of recent portfolio’s performance. Exited by the acquisition of $ISLN which has been a sizable position in my holdings for a while, I went to chase setups where I don’t really have an edge. I decided to open a small pilot position in a stock that was declining towards its rising 20-day MA and a previous zone of support. It was a make or break moment for the stock. The logic was that I risk 10 cents with the potential to make at least 30-40 cents.
The loss was tiny, but this is not the point. Even if the trade was profitable, the process was wrong. This is a flashing warning light for me. Such type of behavior leads to the building of bad habits. I should stick to setups, which underlying psychology I understand well and I have been consistently profitable trading them.
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