Don’t you hate it when you lose $2000 that wasn’t yours. Of course you do!
Okay, this is a trading scenario, so if this bores you… move along, move along, this is not post you were looking for.
Here’s how I lost $2000. Friday afternoon, I bought 2 First Solar (FSLR) “put options”, meaning that I anticipate First Solar to decrease in value. It’s a SELL high, BUY low kind of idea. The transaction was around $3380 or 66% of my account (not a wise inherent move). During the later part of the afternoon, I was down around -$300 and up +$300. Lots of movement that settled in at closing +$270.
So this morning, FSLR is going in the direction that I wanted to go. I was up +$600 at one point and then up +$270 another. TO protect my profit, I use a Stop-Loss order. The name says it all it (helps) Stop (my) Loss on a trade that goes bad.
So I set my stop and I got kicked out of my trade at around $3780, so that was $400 profit for me! YAY!
EXCEPT… that one instance where my trade got stopped was the last big up movement before the stock started to fall.
SO it’s NOT $2000 out of my pocket. It’s $2000 that COULD have been in my pocket.
But I still made a 12% in roughly 6 hours of trading…