5th play — the pain that was ONGOing

well…i know readers have been awaiting this moment since i first started this experiment — my first loss. and to make sure i didn’t disappoint anyone, i made sure it was a substantial one. and so without further adieu, i present a truly bone-headed play…

balance: $2943.02

bought 6200 shares of ONGO on 1/12/07 @ .34 and sold 6200 shares on 1/18/07 @ .25 for a loss of -$590.34 or -27.77%

new balance: $2301.76

total gain after 5 plays (%): 130.18%

i’m not sure what happened here — this is pretty much a perfect example of knowing you should cut your losses and don’t. i entered the play in the first place because it seemed to be coming off a bottom of .25 and i thought if it broke .30 it would have a nice run. well, it did break .30 and it quickly moved up and i chased it of course. i couldn’t seem to get an order filled and thought it was moving so well with such great volume that i chased it almost up to the top — i bought in @ .34 and i think it peaked @ .36 (or so). the MMs started to play games and caused it to come crashing down, but i was convinced that if it closed above the trendline it could still run again the next day. well, not only did it close above the trend line but some great news came out the next morning that had to do with increasing sales which meant increasing revenue which meant the PPS should move up, right? this is the part where you should read my post on “good news” if you haven’t already because i was dead wrong. the PPS continued to drop and i was too stubborn to cut my losses and sell because afterall it broke the trend line and great news came out (once again, i point you to my post on “good news” and the possible disaster that ensues).

so finally, today, after watching it break the support it formed at .25 a couple times, i came to and decided that it was dead and at best would trade sideways for awhile. it’s hard to cut losses though because you keep thinking that it will bounce back — maybe not to the point where you will fully recover your losses, but you continually think that you can recover just a few more of those losses. the lesson learned is that once you reach this mindset — it’s time to cut and move on.

while this play set me back, i am still considerably ahead of where my weekly goals are and it taught me a valuable lesson about taking a loss in this experiment: as the weeks go on and your money compounds, even small losses will really begin to counter all of the huge gains you made at the beginning. it becomes extremely risky to take a double-digit loss and is better to take a small loss and move on than holdout hoping for a gain — one that will probably be small at best.