Let me tell you about the short that almost killed me.
It was back in the mid-’90s, around 1996 or 1997. I had my own hedge fund in Boulder, Colorado.
We were doing about 100 trades a day, so I was always taking shots at different trades.
If a trade didn’t go my way, I’d just get out and move on.
But one day, I found myself like a deer in the headlights. This trade moved so fast, I felt like I was set up.
The stock was Masstec. I’m not even sure if the company still trades. I can’t quite remember the ticker, but I remember the pain.
See, we had a terminal that let us see institutional-only orders that other brokers couldn’t see.
Well, to this day, I still think I was set up and someone had a fake order put out there to sucker me in.
In any case, this trade moved against me so fast that it just caught me off guard.
I should have reeled it in right away, but I didn’t.
I let it run and lost a ton…
I can’t even begin to tell you about the sleepless nights and not telling my wife.
What that mistake taught me is to never let a little loser turn into a big loser — That’s the big lesson here.
There are a lot of reasons for that.
For one, it took away profit I already had booked in other trades.
Plus, as I said, I was running my own hedge fund and if I didn’t make a profit, I didn’t eat.
Simple as that, I had a wife and two boys.
Then there’s the emotional toll.
I was having a great month, and this loss just made me so mad.
It affected my trading beyond just this trade.
These days, I cover my losses quickly. I take a loss at 7%, that’s the most I’ll tolerate.
It’s a hard lesson learned, but an important one.
Remember, cover that loss quick. Set your limit and close it out if it’s moving against you.
Trade well,
Jack Carter
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