If I could buy stocks in words, these are a few of the words that would buy stock in along with a few choice 4 letter words that I'm sure are said over and over again on Wall Street as well as everyday life.
The problem with coulda, woulda, and shoulda is that we never really know what would have happened if we bought/sold that stock because the game changes when you are in the security. I learned that lesson this afternoon. Around 3pm, with an hour to go in the market, I had already successfully traded some call options on the Russell 2000. This was actually my third trade in that security today. I had bought some call options yesterday and held them overnight. I failed to close my position near the open and ended up selling them at a loss. The next trade during the day, I made up the loss, so I was feeling pretty good. So, at 3pm, the market started looking weak and I said to myself, I will not trade this market. However, as the Russell 2000 decided to drop I couldn't resist (I'll do a piece of discipline after I learn how to get some). I thought that if I don't short this drop, I'm going to be telling myself, "I 'shoulda' shorted that drop and I saw it coming to".
So, I short the Russell using put options. And as usual, the market decided to turn up on me. I didn't want to sit overnight in the options because of the overnight time decay (and I also learned a few weeks ago that if the security starts to move against you, get out) I decided to get out and took a loss of about $1.40 per contract. This happened about 20 minutes after I made the trade. 40 minutes later when the market closed, I realized that if I had stayed in the position, I woulda have ended up making about $2.50 per contract!
After reflecting on this trade, I realized I did the right now by taking the loss, but I also realized something else. If I hadn't made the trade, I would have priced the options at 3pm, then priced the options at the close and would have wrongly concluded if I had made the trade, I woulda have walked away with a handsome profit. My thought process would have been, "Man, I 'shoulda' made that trade and I saw it coming, but noooo, I didn't have the guts to make the trade and walked away from a sure thing." When in actuality, I made the trade but the market was swinging wildly and stopped me out with a loss.
We can always look back on a chart and look at point A and point B and figure out what we should have done, but until there is skin in the game, you never really know....
....now if I had just stayed in the trade, I woulda done much better...... <---it never ends!!!