Trading stocks online from Iraq
Thucydides, who was one of the worlds greatest historians, wrote over 2,100 years ago that “as long as human nature remains the same, history will remain the same.” It is then fitting that Jessie Livermore, arguably the greatest trader who has ever lived, would state that, “as long as human nature remains the same, the markets will remain the same.” Both the Ancient Greek historian and the revolutionary Wall Street trader were entirely correct. Human nature can and always will drive people to engage in irrational activities when emotions are running high, which can alter the course of history for the worse or, in my case, cause me to almost lose my entire net worth.
The Day a Trading Lesson Was Learned…..in Iraq.
” Dude, are you O.K?” I heard my trading buddy say as I stumbled back into my room. “Beansie lost his hand, Mike took some shrapnel, and I inhaled some smoke but other than that we’re all O.K,” I replied as he looked at me shaking his head. “By the way…..what’s the Dow at?” I muttered.
We were addicted. Steve and I had been trading options from our meager online account on a hit or miss internet hook up in the “middle of nowhere,” Iraq for the last 6 months and we’d been making a bundle. Looking back on our trades it was pure luck at the time and our strategy consisted mostly of the “dude, it’s down so far it has to go back up” theory. However, throughout the year, we began to elevate ourselves from the gambler’s class to what some might like to call educated amateurs. We read anything we could get our hands on including How to Make Money in Stocks (O’Neil), Mad Money (Cramer), and How I Made $2,000,000 in the Stock Market (Darvas). Eventually we could even speak intelligently about the finer points of the fast and slow stochastic and how they should be used. Our newfound methods coupled with our voracious appetite for books on the market netted us some sizeable gains in the options market, which would soon dissapear after one trade.
Back in my room I used the stock market as an escape from the reality of combat that I had just experienced so Steve and I got to work in a hurry. My emotions ran the full spectrum. I was angry, sad, elated to be alive, and guilty I wasn’t hurt with my men all at the same time. So much for our cold hard method of stock picking that netted us so much over the last 6 months. All bets were off and my emotions were telling me that if I could make $300,000 overnight out of my $60,000 I would feel better in the morning. I bet it all. One stock would save me. Halliburton (HAL) had earnings coming out the next day and oil was at record high. It was a no brainer. I bought $60,000 worth of just out of the money calls in the hopes that there would be an earnings blow out the next morning and I would be rich. Rich enough to take away the pain of that morning’s events.
Some of you may be shaking your head as you read this but try and remember the most emotional experience of your life and then try to imagine placing rational stock trades during that time. Emotions are an amazing thing and they can make you do things your head knows are wrong but your backbone swears is right. Not an ideal state of mind in which to trade I guess. I had abandoned all sense of discipline and had completely ignored my own rules. I bet the farm on one trade, I bought the day before earnings, and worst of all, everything was riding on my hopes. The epithet of “gambler” was attached to me once again. The next morning, adding insult to injury, earnings were a blowout but the market reacted poorly as it so often does after a release. HAL went down and it went down fast. My nose was bloodied and I was dazed but I snapped out of it and sold immediately; thereby preserving any little bit of capital I had left (about $5,000) so I could fight another day. And fighting I still am.
Although I’m nowhere near my peak I’m grinding my way back by making sensible and good risk/reward trades based off the original methedology Steve and I worked so hard to create. A loss of $55,000 was hard to swallow but we had learned one valuable lesson to add to our stock trading rucksack:
“NEVER TRADE ON YOUR EMOTIONS….YOU WILL LOSE”
All aspiring traders who read this should remember that you will have losses. They are unavoidable; however, as long as you have $1 left the fight is not over. Keep refining your methods, adapt it to the market, and never give up. The second you let that other little emotion called fear take over and keep you from the trading desk forever, you have lost.
Best of luck and remember to give your loved ones a hug before they fall asleep at night. After all, money isn’t everything,
Panagiotis