Sunday , 17 December 2017
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My First Trade == My First Trading Lesson

Gosh, even though it’s been nearly 14 years…I can remember my first trade just like it was yesterday.

It all started in late 1999 when I received a pamphlet in the mail on trading futures. I bought their course (and several follow-on purchases) and proceeded to study like my life depended on it. I spent hours every day reviewing their videos, analyzing charts, making notes, and generally doing everything I could think of to really learn this stuff. After several months I decided I was ready, so I took the $7000 that I had set aside for this and opened up my first brokerage account.

My trading approach was fairly straightforward at that time. I was still VERY naïve, and my technique was pure technical analysis based. More specifically, I was trading 2 chart patterns – one was a breakout and the other was a reversal. My routine was that each night I would set aside time to mark up my charts and look for those patterns to form. (And I guess for clarity, it’s worth pointing out that I was looking at daily charts, and for trades that would last a few days to a few weeks.)

Well with what a believed was a solid education in hand and a shiny new trading account ready to go…now it was just a matter of waiting for one of those setups to come along….

Luckily it didn’t take long :)  Within a few days, a chart pattern in Corn that I had been stalking was starting to show all the right moves. So the next day at work I could not help myself, I just had to keep checking what the chart was doing. (I know, shame on me for using work hours for this!) Well at about 10am everything lined up…the setup was there, the trigger was present. Now all I needed to do was pull the trigger – and I did.

So about 15 minutes later, I was stopped out for a loss of $700!

That’s right, my first trade ever in my life, was a $700 loss.

Alright, well here’s the kicker…

As soon as I logged that $700 loss, I immediately re-entered the trade…only this time I put the Stop Loss in the correct location. The next day I closed out the trade for a $1400 win. So all in all, I made $700 with my first setup.

So here’s what I learned…

  • On that first attempt I knew where my entry would be, and I knew where the initial Stop Loss was supposed to be – based on sound technical reasoning
  • That initial stop would have been a $1400 risk. However, I did not “want” to risk that much. So instead I chose a tighter stop of only $700.
  • Now for the record, the $1400 level was the correct technical location
  • I knew at the time that I entered the trade that I was supposed to use the wider stop. Yet I consciously chose (in the heat of the moment) to use the tighter one – which was obviously emotionally based
  • When I got stopped out for that initial loss, I knew that I had made a mistake. But I also knew that the setup was still valid.
  • I can honestly say that the decision to re-enter was not an emotional one.

Ok, so I know one of the first things you might be thinking is:  “Umm Mike, you’re crazy! Risking $1400 on a $7000 account is just plain foolish!” Well, you are right, of course…but we’ll save that discussion for another article :)

So…what was YOUR first trade?

Do you remember it? How did it work out? Did it result in a learning opportunity for you?

Post a reply, I and others would love to hear about it!

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