Guest Post By Tony Ellis: How I Turned My Two Best Trades Into My Two Worst
Posted by timothysykes on Sat 21st of Jun, 2008 03:25:07 PM
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If you read THIS post about grad student Tony Ellis making over $50,000 in trading profits over the past few months entirely due to PennyStocking, you know he hasn’t just gotten lucky, he’s been dedicated. As I posted this morning, successful trading really is all about practice and learning time tested rules through your successes and failures, so in the following guest post written by Tony Ellis is quite an important one. He’s had a great run, like many who have already purchased my PennyStocking DVD, but that doesn’t mean he ain’t gonna make mistakes.
Mind you, my dvd only teaches a set of trading guidelines, what has and hasn’t worked for me…it certainly doesn’t have all the answers and actually is quite different for everyone depending on the student, experience level, risk tolerance, discipline and goals. Some things as Mrs. Gump says, “You’re gonna have to figure that out for yourself”.
In short, yes, I try to position myself ahead of big moves, but there is a reason why I’m so quick to take profits, allow so-far-successful-but-still-makes-mistakes-along-with-the-best-of-them
-awesome-for-sharing-not-only-helping-himself-but-others-too-which-rocks Tony Ellis to explain:
We always hear about successes from other traders but I want to share a mistake. I have learned more from my mistakes than from my good trades (TIMcomment: me too!). I don’t want to anyone to have unrealistic expectations. Trading for me and for most people involves mistakes even if most traders don’t admit mistakes (TIMcomment: uhh can you say Elitetrader!). This is what makes Tim’s model of transparency so valuable for learning. I’m here to learn primarily but it’s a bonus if I can help some of you by sharing my experiences.
I went into Thursday holding FPP and TGC long (TIMcomment, awesome positioning man, beautiful clean breakouts as I noted HERE!). I bought 5000 shares of FPP Tuesday @ $5.97 and 15000 shares of TGC @ an average of about $1.59. Perfect entry into both and all I had to do is sell Thursday morning for an easy $10K + profit.
Wrong!
I held both until they tanked, narrowly escaping with a profit and down $8K for the day (boo hoo you little bitch, your worst trade isn’t even a loss? Blehhhhhh, you poor poor highly profitable trader!). Sold FPP @ 6.11 (missed LOD (low-of-the-day) by .06…lol) and TGC @ 1.70. I don’t even want to think about how far my account closed from its intraday high, around 15K I think.
I wish there was an excuse for these mistakes but there’s not. I simply broke all my rules. This wasn’t due to a failure by Tim or his DVD, he would never have held more than 5 minutes after the open (TIMcomment: damn straight!). This was due to greed and overconfidence on my part. The stock market will humble you very quick.
Lessons:
Always have an exit strategy when you enter into a trade. I normally sell immediately after a stock fails to make a new high of the day. If the first strategy is ignored you have to sell if a stock makes a low for the day. I ignored both of these somehow and had to go with my strategy of last resort…don’t allow a gain to turn into a loss. Although I was down huge for the day I still managed to exit both positions with a gain and am still up for the week.
Never set overambitious price objectives for a trade. Going into Thursday morning I had one thing on my mind, make $10K off each position (Tim, any idea how I came up with that number?) (TIMcomment: we humans like big fat round numbers for stop losses, milestones and goals..gotta ignore that weakness and be more like a machine…no expectations). I also had getting to 100% overall gain for the year on my mind. Thinking this way caused me to hold onto these stocks when it was irrational to do so.
The real lesson is to learn from your mistakes and don’t allow one mistake to turn into a whole series of mistakes. I’ve done this in the past and really dug myself into a hole. Back in late February I had a streak of bad trades and foolishly tried to make it all back on one trade. I bought TMA at $2 thinking I could make a huge gain. (TIMcomment: definitely not one of my ideal patterns, just a random financial) I ended up selling the next morning for .90 with my account down 30%. This marked a turning point for me. I took the next several days off to reflect on my mistakes, re-read An American Hedge Fund and watch PennyStocking again. I developed a greater understanding of Tim’s Strategy and have made only a few bad trades since. Since March my account is now up $80K and well over 100%. Hopefully Thursday’s mistake taught me the importance of taking profits quickly. Micro Caps are too volatile to do otherwise.
That’s right folks, Tony Ellis not only admits his mistakes, but now has gone from turning $80k into $130k in 6 months to earning another $30,000 in the past few days alone! This is a teacher’s fantasy so I hope he keeps learning, earning and sharing…the same goes for everybody else too!
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Other Websites Referencing This Post
- How Grad Student Tony Ellis Made $6,500 Overnight & Is Now Up $85,000 In 7 Months! | TIM - Timothy Sykes
- TIM June Monthly Review: It’s Satisfying To Earn 14% When Most Others Lose | TIM - Timothy Sykes
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TIM Trades
View All| Date | Stock | Buy | Sell | Net |
|---|---|---|---|---|
| July 2 | KIRK | $10.60 | $11.53 | $1377 |
| June 30 | ISRL | $107.97 | $118 | $985 |
| June 24 | LZB | $4.53 | $4.81 | $1240 |
| June 17 | GWSC | $1.86 | $2.76 | $2679 |
| June 15 | SHZ | $1.66 | $1.83 | $280 |
| June 15 | SPNG | $0.11 | $0.18 | $630 |
| June 12 | JAZZ | $2.84 | $3.26 | $380 |
| June 12 | MAPP | $9.68 | $10.07 | $565 |
| June 8 | HEB | $3.00 | $4.18 | $334 |
| June 3 | GROW | $8.64 | $8.96 | $740 |
| June 3 | SYMX | $1.21 | $1.11 | $940 |
| June 1 | USCN | $0.55 | $0.86 | $260 |
Total: $65,674 (421%)
Great story Tony. Amazing how the battle of the moment clouds the judgement eh?
Tim thanks for the Tiger woods post. When I first started trading I had the newbie feeling and no discipline.
Did hours of research, haunted sites and sites for info. Read history on all the greats.
Lost $900 fast. I found the trend.
I traded everyday this past week and the more I traded the more I learned, the more my profit went up. High is $700 in a day, but there’s no limit!!
No the account stays green.
Even added my touch to your strategy!
Tony congrats on your high.
We own the street, Wall Street!
//Signed//
The Market Fantom
Excellent posts today Tim. Definitely worth bookmarking for quick reference…particularly when I get on a bad trading streak.
Have to strive for the mental toughness of Tiger in my trading and elimate those natual human emotions/tendencies that lead to foolish/losing trades.
Tim thanks for letting Tony give us some insite into his trading mistakes.
Tony who do you use for your broker and who do you use for your level II info?
Good Job Tony
Nice article Tony. It’s so funny, because my biggest loss on a trade was on Thornburg as well, and right around the same numbers. We must have both had the same stupid, undisciplined lets-roll-the-dice idea! I’ve since learned, and haven’t had a down month since (well, I’m down about $30 this month, but hopefully not for long). Keep trading and learning, and stay in the game. Good luck to you!
Oh, and Tim is right, humans love round numbers (you know, all of my long term investments are always shares in multiples of 25.. Human nature), Everyone has to break away from that, you need to be a machine to profit in this game..
Fantom- you kill me bro.. You have to keep posting.. You also need to start wearing a cape and a mask when you trade.. That would just be awesome!!!
You can use the “humans use round numbers” to your advantage when trading. Near round numbers make good entry/exit points (like Mike13th always does) since they tend to be natural points of support/resistance as a lot of people are using those round numbers.
Tim this blog inspired me to keep educating and making money out of stocks so i can eventually buy your cd’s! Your book is coming next week sometime!)Although the only option I have is to go long on stocks I know I can make profits.
Tim i am your greatest fan, you’re articles are really good! Keep up the good work of educating noobies like myself.
PS I think it would be great if you could sell the CDS to me half off since im under 15, im your biggest fan, and since I have an account under 2k ( currently $500 will have 1k in 1 month ).
Cash-I use Scottrade and Etrade. I’m thinking about switching to Interactive Brokers to get better borrows. I use Etrade Pro for level II and no I didn’t copy Tim.
BTW…I do have recent trades where I’ve sold for losses. I don’t consider them bad trades because I’ve been disciplined and cut my losses quickly when the stock didn’t move the way I anticipated.
congrats tony, hope to be joinin you one day
Tony how quick do you cut your losses?
I stick to buying breakouts and shorting breakdowns so if they fall below those points I’m looking to get out very fast. I don’t have set rule but always less than 5% and many times under 2%. I can always re-enter later.
Tony what is your handicap? With all your earnings you should have a lot of time to play. I was in a PGM program at one time. Did you pass your PAT?
What’s up Bob(VC)?
Yes Tim fam, we must obey the rules that govern us as traders.
Weekends are good and bad. No trades to make. Time to gather thoughts, do research, and pick new victims.
I’m still holding past picks for this week. As I said in past post, this coming Thursday and Friday is D-day for them. But I will not cover, for they will continue to fall 2 to 3 more days.
We will take Tim show to another level.
Live interviews from one of his students every week.
The Tim reign is strong, unlike companies who post balance sheets that are not valid.
“No more capital is needed,” the CEO says.
Soon your capital will be ours for the taking!
Sleep well CEO’s, for I don’t!
//Signed//
The Market Fantom
Very inspiring story, and congratulations to Tony! And greatest appreciation to Tim for his dedication to teach others, making this ideas and trades transparent to others. My porfolio was destryoed almost completely by BSC (bought at $34 trying to catch a falling knife and ended up selling at $3.10 in panic that Monday BSC tsunami morning) I have been able to bring my BSC damaged porfolio back 400% up since then following Tim and some other great people here on the board. Thank you all!
Thank you Tim and Tony. It has been my experience too that you learn the most from the mistakes. I don’t hope that you make more mistakes, but if you do, keep posting them for us all to gain. Now have some weekend fun.