First trade ever down over 15%

I feel like I have the worst luck among everybody. Finally after a month of issues I funded my account at Questrade with $3k. As that may sound like nothing, I work part time for $10/hour, and I am in highschool and only 18 years old. So it took me 6-7 months to save up that money if that gives you a better insight to my frustration. I decided after a bit of research to buy into a mining stock CXZ yesterday morning. I bought 1000 shares at 2.11 and then another 200 at 2.07. For anybody who is interested it hit it's low of 1.79 24 hours later on 0 news and nothing that should be pushing the price of it down. I'm so beyond mad that in my first trade, first 24 hours trading I could possibly manage to lose that big of a percentage of the money I've saved. I feel i'm so deep under water that I should just stay in at this point and hope to recover at least some of my losses, I really don't know anymore just seems like everything is against me these days and its hard when something like this happens, when it just doesn't make sense. I must be missing something

Consider it a downpayment on your education as a trader. If you learn from it, it isn't money lost pointlessly. And it could be worse: you could have had beginners luck for a few weeks or months and ended up losing 90% of a far bigger number.

Why did you buy CXZ in the first place? What time frame are you buying it over? What exactly were you expecting from a penny stock which can move a few cents and represent a 15% move against you? Just a few things to get you thinking.

Can you post some charts so we can get a perspective ?

Already it is clear that your position size is too large relative to account size.
Another thing...avoid penny stocks...they are penny stocks for a reason !!

counter_violent said:

Can you post some charts so we can get a perspective ?

Already it is clear that your position size is too large relative to account size.
Another thing...avoid penny stocks...they are penny stocks for a reason !!

Click to expand...

I had had my eye on it for a while and it seemed that (Or so I'd thought) it was getting close to a bottom, since it had lost a big percentage over the prior weeks.

Here is a link to it, I bought it at $2.11 right before it sank over 10% yesterday. It was the biggest loser on the AMEX yesterday not really sure how to post a chart but here is the link for those of you who are interested

http://www.google.com/finance?q=AMEX:CXZ\

Oh and the reason my position size is so large considering my account is because of commision chares, I wanted my commision to be worth no more than 1% of the the trade, or else I figure it would be pointless to trade at all. Hard with such a small balance. Anyway, I guess I have somewhat learned a lesson here

Jack o'Clubs said:

Consider it a downpayment on your education as a trader. If you learn from it, it isn't money lost pointlessly. And it could be worse: you could have had beginners luck for a few weeks or months and ended up losing 90% of a far bigger number.

Why did you buy CXZ in the first place? What time frame are you buying it over? What exactly were you expecting from a penny stock which can move a few cents and represent a 15% move against you? Just a few things to get you thinking.

Click to expand...

Answer these questions honestly and you'll have learnt something.

or... to be a little less cryptic. You've invested in a micro-cap very specialist mining company. Not one analyst covers it. Unless you really know what you're doing (and maybe you do) in terms of understanding everything about what this company does, this is never going to be anything less than a gamble. Looking back over it's share price, some days its traded a 75c range for a stock that trades at $1.5. You could have made or lost 50% in a day: you've been lucky just to lose 15%. If you really, really think that this company has something which is going to turn it into a ten-bagger, then a 15% move should be within your tolerance and you just have to sit tight - it's goes with the territory of investing in micro-caps. If not, you shouldn't really have been in here in the first place.

Just an anecdote about the last two days of my micro-cap portfolio. One stock announces its being bought by a large competitor +85%. Another stock warns 2011 profits will disappoint -30%. You can't buy these things without expecting a bumpy ride along the way.

CXZ is on a clear downtrend on the daily chart.
Never go long on a swing trade or investment when the price is falling.
Richard

Hi cpaddon,
Welcome to T2W!
As you're new to both trading / investing and to T2W, you won't know who you can trust and who you can't. Both JoC and Mr. C' are professionals who really know their stuff - you would do well to follow their advice - and C_V's too, IMO.

Unless you've got very good reason to think the price of CXZ will recover (e.g. the company has found new reserves of whatever it mines / has developed a cheaper way of mining it / or is in line for a takeover bid etc.) - then perhaps you should count yourself lucky that you've only lost 15% and get out?

Have you been paper trading a fantasy portfolio before this live trade? If so, for how long and how many trades - and what were your results?
Tim.

You have been hurt and you are in shock. Many of us have had similar experiences. What to do now?

Paper trade for a while. Try out your ideas where the harm is not to your real money account. Share your ideas here and get feedback with your training wheels on.

Once you have a better feel for what is happening and you have had two or three successful trades in a row, begin trading for small money. Paper trading has its limitations in realism in both how fills are made and how you react psychologically.

You must survive to thrive. Learn about money management and the concept of risk of ruin to better size your trades. Learn the mechanics of limiting your losses when the trade goes against you. No one gets it right 100% of the time. How you handle your losses, both in limiting them and psychologically are critical to survival.

Commissions are the cost of doing business and should never drive your trade size.

Don't trade if it's not fun.

First let me just say that I really appreciate all the replys, it is much easier when there are others who have been there that you can talk about. I guess everybody goes through this variance at some point or another and it's just part of the game. Still doesn't justify what I did, but I think at least recognizing it and correcting it for next time is a good step in the right direction. I have been reading and going through some articles on this site for quite some time and can definitely see most of you guys know exactly what you are talking about, so much respect coming from my end. With that being said I will try and respond to all the comments and questions. What I did was obviously stupid and unwarranted, I am young and I have a lot to learn (clearly) but regaurdless I am here to learn and really appreciate the support.

Why did you buy CXZ in the first place? What time frame are you buying it over? What exactly were you expecting from a penny stock which can move a few cents and represent a 15% move against you?

I was planning on buying and holding for any time between 1-2 days. Not particularly holding it over the long term. Why did I buy it? Purely speculation, some drive to just jump in the markets because I never have been able to before, and some comments from my dad who is a day trader. I really considering my experience didn't know what to expect, however not exactly what happened.

--------------------------------------------------------------------------------

CXZ is on a clear downtrend on the daily chart.
Never go long on a swing trade or investment when the price is falling.
Richard


I guess taking this away from the situation and learning something, maybe it was the price I had to pay

Have you been paper trading a fantasy portfolio before this live trade? If so, for how long and how many trades - and what were your results?

I have been trading a fantasy portfolio for a long time. Obviously not using the strategy that I used (or lack there of) but I have consistently paper traded for a few years on wallstreetsurvivor.com, and my long term portfolio that started at 100k, is at 211k. Anyways, that doesn't say much when i'm down 20% in my first 2 days of trading. But with that in mind, I think that doing anything fantasy is much different than how you play real markets. I learned this 2 years ago when I started playing online poker, I played with play money for several months since I didn't have a credit card at the time. I got to a point where I could virtually beat anybody in the play chip games on fulltilt and pokerstars. Needless to say, I was eager to deposit some real money and start making a fortune, but it didn't happen that way. Emotions played a huge part for the first couple months playing with real money which really affected my game play. I started really digging deeper and caring about every hand in real money (similar to trading as I think each trade needs more thought and precision) Anyway, as a result I lost $1200 over a year before I ever cashed out once. (keep in mind I was about 16 years old at this point so this is A LOT of money) Anyway, it took me a year to become a breakeven player after mastering play chips. I feel that this goes for most scenarios that are similar and trading is something you have to adapt to in the real markets not fantasy portfolios. That is just my opinion however, everybody is different.

You have been hurt and you are in shock. Many of us have had similar experiences. What to do now?

Paper trade for a while. Try out your ideas where the harm is not to your real money account. Share your ideas here and get feedback with your training wheels on.

Once you have a better feel for what is happening and you have had two or three successful trades in a row, begin trading for small money. Paper trading has its limitations in realism in both how fills are made and how you react psychologically.

You must survive to thrive. Learn about money management and the concept of risk of ruin to better size your trades. Learn the mechanics of limiting your losses when the trade goes against you. No one gets it right 100% of the time. How you handle your losses, both in limiting them and psychologically are critical to survival.

Commissions are the cost of doing business and should never drive your trade size.

Don't trade if it's not fun.

Paper trading: As I said before, paper trading isn't something mentally I can compare to real life trading. I think that getting past and eliminating emotions is very crucial in order to be successful, that is something I can't do on paper. With that being said, I think it is important to develop strategy which can obviously be tested on paper, but at this point i'm very new and know little to anything about strategy.

About commision, please bear in mind that my account is only about $2,000. It is with questrade so I am only paying $4.95 / trade. Obviously risking everything isn't the right idea no matter what the circumstances, but the motive behind trading is obviously making money. So if I know every trade in the + or - will still end up losing because of commision, it's mentally tough to trade that way. Regaurdless I will take that advice and try to apply it as best I can.

I posted a reply but it did not show up? It said succesful but am I missing something?

cpaddon said:

I posted a reply but it did not show up? It said succesful but am I missing something?

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sorry cp - it got caught in the mod queue - there now

perfect thanks, sorry for such a long reply

fook me the fact you had $3k as an 18 year old is great!

Anyway, as others are saying, the way you're going about this is bloody stupid. Forget stocks, for a start.

try 10p a pip forex with £250 accounts, after blowing up 30-40 demo accounts as i did!

Congratulations.

You are well on your way to becoming a trader very quickly.

You have learned the first of many valuable lessons.

The first is that paper trading is completely different to trading with real money. (Losing real money brings out the sweats and panics).

The next is that penny stocks are volatile. CXZ has moved as much as 75c in a day, so the drop yesterday is nothing out of the ordinary. (You should have known that and a 15% move should be within your tolerance)

The next is that it is not a huge loss. Keep calm, stop sweating and the market may recover the minor loss.

oh by the way liquidate this crap unless you have a good reason to be in a mining penny stock ffs!

I got out finally at 1.85. Sold at a $175.58 loss, not the end of the world but it hurts when your only source of income is at $10.25 / hour

cpaddon said:

I feel like I have the worst luck among everybody. Finally after a month of issues I funded my account at Questrade with $3k. As that may sound like nothing, I work part time for $10/hour, and I am in highschool and only 18 years old. So it took me 6-7 months to save up that money if that gives you a better insight to my frustration. I decided after a bit of research to buy into a mining stock CXZ yesterday morning. I bought 1000 shares at 2.11 and then another 200 at 2.07. For anybody who is interested it hit it's low of 1.79 24 hours later on 0 news and nothing that should be pushing the price of it down. I'm so beyond mad that in my first trade, first 24 hours trading I could possibly manage to lose that big of a percentage of the money I've saved. I feel i'm so deep under water that I should just stay in at this point and hope to recover at least some of my losses, I really don't know anymore just seems like everything is against me these days and its hard when something like this happens, when it just doesn't make sense. I must be missing something

Click to expand...

Looks good. I'm buying too.