The eldergulls diary

date 10/26/07 time 9.51 pm

HI all,
I know I dont know. No matter what information I have, no matter what I am doing, I can be wrong. I have learnt two very important lessons in this market. 1] If u never bet ur lifestyle, from a trading standpoint, nothing bad will ever happen to u. 2] if u know what the worst possible outcome is, it gives u tremendous freedom. The truth is that, while u cant quantify reward u can quantify risk.
I knew a friend who was a supplier to one of Indians bigger companies and hence thought that he knew the company inside out. He understood the line of business of this company very well and he was once talking to me when I was short in this particular stock. He kept telling me that what do I know about the company that makes me go short when he was sure it was going to go up. I told him I knew the risk. He, over that lunch which lasted for three hours, told me to be aware of what I was doing as he was a friend and five times over I told him I knew what the risk was.
Three months later I came to know he lost a fortune being long that scrip.. He obviously dint understand my message. Do u know something guys? He really understood the company more then me and the line of business even more then I can tell the back of my hand. But the point is that he dint know what was the risk. Risk is a no fooling game, it does not allow for mistakes. If u do not manage risk, eventually it will carry u out of the market and with a bloody nose at that.

Date 10/26/07 time 9.46 pm
Hi All,
From monday i will be wrinting my own trading manual here as that will help me record the facts and figures about my decisions so that i can evaluate it later.