Entrepreneurship Story (3A)

In the beginning of October I decided to start day trade/ swing trade the stock market through stock options. I’ve always had an “itch” to get into it and finally decided to try it after having some money I thought I could be OK with losing. Probably the wrong mindset to head into it, but my main problem was not having a plan.

So, I went in day 1. I wasn’t afraid of the numbers, the graphs, the indicators, I knew some of the stock market jargon, and first day did well, made $160, second day $90, and after that week made around $390. Not bad, probably was beginners’ luck. However, I never really got a strategy going, I was just going off what I learned from a couple of videos and I got a little cocky. No profit taking strategy, no stop loss strategy. I went off the thrill of making and losing (at this point mainly winning). After that I started using a little more of the money I put in, getting riskier, and started losing more trades than I was winning. And then that’s where it went downhill. My losing trades were affecting my next trades, and it was loss, after loss, and in the world of stock options, you can lose a lot really fast. One point the market wasn’t even open, and I lost $400 out of the gates (I held a position overnight, and the price of the stock was down that morning), recovered some of that, but still had a negative day.

Why were the losses affecting my trades? Because I wasn’t mechanically trading the market. I didn’t have a plan and was trading based off my emotions. So after a month in I was deep in the hole from where I funded my account and decided to stop and learn. The amount of work I’ve put in since then to learn the markets has been paying off. I know actually come up with what trades I would actually enter, where I would get out if I was in the profit, but most importantly know where I was wrong (not just know that I’m wrong, but where I would be wrong and to get out of the trade). Because sometimes the market can fool you. It can go one way, and then go the opposite direction. The initial prediction you had was challenged, and if you don’t have a spot where you know you’re wrong, the market would’ve just psyched you out thinking it was going to go down (or up if you are short) and then go the other direction. That’s what was happening to me (and sometimes I was dead wrong but didn’t want to admit it).

Since mid-November, I haven’t been using “real” money in the markets but have been using “play money” accounts brokerages allow you to have to get your feet wet. With this fake account I’ve been able to get away with some nice profits, and on bad days lose very small. I’m still a little scared to get back into the real deal and am still formulating a swing trade plan (a security/stock not bought and sold on the same day), so I don’t have to actively manage the account throughout the day or even weeks. I’ve also started to implement proper stop losses, or profit exiting positions in place automatically. Even with the losses I’ve taken, it has been a great experience for me. I’ve enjoyed learning about the markets and how it shapes the way we live.   

I enrolled in ENT3003 because I want to learn the entrepreneurial “mindset.” I want to know how they can come up with the ideas they do. Their work habits, and the process they go through with coming up with an idea, planning, executing, and then potentially making money off it. That “process” seems exciting to me and would like to know all the details that going into it. So many ideas or products I’ve seen that look dumb end up being successful. I mainly want to know how they get to that point.