I’m going to try my best to NOT make this a long post, but I’ve come to a place in my trading that I think is one of the most important turning points I’ve experienced since I started this crazy journey almost 15 years ago. After a long, protracted battle with most of the common issues that derail the average trader (e.g., taking huge losses, not letting winners run, getting too emotional with trades, becoming “married” to a stock, etc.), I came to a realization that has really changed the way I approach trading, and this in turn has led to a much better performance in recent months:
This is my portfolio as it stands today, July 8th, 2016. I blacked out the share amounts, market value, cost basis and dollar amount of gain or loss because I don’t want anyone focusing on the amount of money being made (or lost)—that’s not even relevant, and here’s why: Some people will be impressed with how much I’ve made, and others will not. At the end of the day, focusing on dollar amounts just completely takes the focus off of what’s really important, and that’s the percentage return. If you can master that part of it, you can really grow your account. Since I opened this account back in October of 2015, I have earned an overall return of roughly 33 percent, and I’m super-stoked about it. As you can see, many of the mining stocks I kept pounding the table about on Twitter really began to take off, especially post-Brexit. I’m astonished at the percentage return I’ve earned on Vista Gold (393.46%!!!) and Tanzanian Royalty Exploration (96.46%) in particular, but as you can see, most of my other stocks are in a nice double-digit return zone as well. If you’re thinking that I stumbled upon some hot stock tips on Twitter and scooped up these shares accordingly, that would be wrong—in fact, it wasn’t until I stopped paying attention to all of the stock chatter on Twitter that I really began to earn some solid returns.
Let me explain: I realized that I was allowing too many external opinions from too many traders on Twitter—many of whom I follow and totally respect—to influence my trading decisions, to the point where my own thoughts and trading ideas were getting lost in the process. I started buying stocks that deep down I didn’t have one bit of personal conviction about trading based on their chart or price action (DSS & DAKP, anyone?) just because they were a popular pick at the time, and I basically spent my time trying to “justify” why I bought them after I bought them. Not a good idea. I started realizing that I was subtly allowing groupthink to control my trading decisions, to the point where I was more concerned about getting in on the “popular stocks” instead of really following my own convictions. As a result, I had a portfolio full of crap stocks that I didn’t even want to be in, and subsequently lost money doing it.
Shutting off the Twitter Chatter
It wasn’t until I started easing back on scanning my Twitter feed that I realized what was going on. I was way too caught up in the excitement of other people’s trading ideas, and whatever the “hot stocks” were for the moment (MGT, anyone?), and it hindered my own good judgment in the process. So I took some time to get the heck off Twitter, and began getting back to my “roots”, which basically meant sticking to my guns in terms of choosing mining stocks that I knew had good technical setups, given the fact that I am firmly convinced that the gold and silver markets are at the beginning of a major bull run. I also stuck to my guns in terms of waiting for the trades to really mature instead of immediately selling on the smallest little spike just to lock on profits. As a result, I have made over 300% on VGZ (it was nearly 500% at one point), offloading shares along the way to the point where now I am completely playing with house money instead of my own. Same thing is true with TRX, and I’m getting there with NGL, which is an energy stock that I spotted late last year when it was basically considered toxic by most of the major analysts. I’m now at 96% with that one, actually without trying, because I mainly bought it due to the crazy dividend yield at the time, which obviously has been decreased due to the price increase as well as the cut in dividends that happened earlier this year. Had I stayed on Twitter and kept following the latest & greatest exciting stocks and whatever-baggers, I would probably still be getting into trades that I have no personal conviction about, and that never ends well. Think about it: If your trading decisions are not fully your own, how can you manage your positions with any conviction? If you’re in a trade based on someone else’s excitement or convictions, what kind of foundation is that? Again, it rarely ever ends well.
Patience is the Key
I think that the one thing that I’ve taken away from this whole change in my thinking is that I can be patient with trades when the decisions are fully mine. I can’t be convinced to stay in a position based on someone else’s recommendation; it has to make sense to me. When I spotted VGZ late last year, I got in at 0.34 (all-in cost per share), and I stuck with it due to the technical formations that I saw developing. Once it popped over a dollar, I stayed with it even through that nasty correction in mid-June, and now it’s at $1.66 per share. I did the same thing with Great Panther Silver (GPL) earlier in the year—I scooped it up at 0.71-ish in February, and held it until the doggone thing hit $2.12 per share in late April, peeling shares off along the way. I earned close to a 300% return on that one too, but honestly, I wasn’t fully settled in other areas of my trading decisions during that time. But now, though…I’m only listening to my own gut instincts, and so far so good. In fact, 2016 has been my best-performing trading year, literally EVER. I thank God for the process.
The Bottom Line
I’m learning how to exercise patience and let stock moves mature, and I’m not getting “spooked” out of trades prematurely, because I know exactly why I got into them in the first place. Also, I’m holding for larger longer-term gains with actually far less risk than I’ve ever utilized before (more on that in a future post). For the first time in my entire trading journey, I have earned triple-digit returns on multiple stocks in a single year. And it all came about because I shut off all the noise on Twitter and started having more confidence in my own trading decisions. And it feels great.